19.5 C
London
Thursday, July 29, 2021

The Implications of China’s Return to Third Quarter Economic Growth

Must read

Graham Perry
Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer.

First – the facts.

Figures released this morning via the Financial Times record that China’s economy expanded 4.9% year-on-year in the third quarter “as industrial growth continues to power the country’s recovery from the coronavirus pandemic”.

The recovery has been created by state backed industrial growth which increased by 6.9% in September 2020. The significant point is confidence – retail sales also recorded their best performance to rise by 3.3% after seven straight months of decline – January to July 2020. The hope and expectation is that consumption will take over from investment “to become the major contributor to domestic demand”.

Stepping away from China, the IMF expects global growth to be negative in 2020 and the worst since the Great Depression in the 1930’s. In that sense China’s significant return to growth provokes comment and review – none more so than in yesterday’s UK Sunday Times.

David Smith – the experienced S Times economics correspondent – reviewing the pandemic’s effect on world growth states “Perhaps the most remarkable story is that of China” In January 2020 the widespread view, Smith notes, was that China would bear the brunt of the coronavirus pandemic. There was talk, he writes “of moving global supply chains away from production disrupted Chinese factories and of China’s four decade growth miracle coming to an abrupt end, with serious consequences for President Xi Jinping”. In fact, China will be the only significant economy to record growth in 2020.

Smith opines that China’s turnaround has “been achieved through a combination of very tough lockdowns – tougher than anything in the West – and robust Covid testing” This is an interesting point – China has done well, he suggests, but at the expense of individual freedoms. The lockdowns have been harsh and authoritarian and the testing  -Smith’s word is “robust” – carries the barely concealed suggestion that the process has been intrusive even invasive as the State has taken decisive action.

There is a political point being made here that China has been successful because it has been intolerant of individual freedoms and directed its people to submit to lockdowns and testing. I wonder whether the 60,000 UK citizens who have died from the virus would, if asked, have preferred a more rigorous form of government intervention in the Chinese way than the indecisive and  ineffective initiatives taken by the UK government? It raises questions as to the extent to which, in this coronavirus crisis, the UK form of democracy is better for the people than Chinese form of authoritarianism.

In a separate article in yesterday’s Sunday Times, Tony Allen-Mills and Andrew Gregory,  note that the Wuhan Philharmonic Orchestra played at China’s first classical music festival since January; the Wuhan Women’s football team won the national championships; a new international cargo route links Wuhan with Addis Ababa; and a stadium commandeered as a hospital was restored to sporting use and 7,500 fans attended a basketball game.

Another point is statistics and figures. The Lancet has recently noted that “the UK has a population 20 times smaller than China. Yet it has seen five times as many deaths – all of which raises the question: how has China managed to wrest control of its pandemic” Few experts, say the writers Allen-Mills and Gregory, believe that China is still fudging its data whatever may have happened in the early days in Wuhan. China, they continue, has recorded no deaths and only a handful of cases since mid-August. They point to explanations: the SARS experience; the small number of care homes; rapidly expanded production of personal protective equipment. Additionally, Lancet records, Wuhan was locked down for 76 days; population movement was severely curtailed and only one family member of each household was allowed to leave home every two days to collect supplies.

I have often made reference to the contrasting political routes by which the UK and China have journeyed to the present. The UK has Magna Carta, Habeas Corpus, Supremacy of Parliament and the Rule of Law. China has experienced dynastic authoritarianism, a “century of humiliation”, the Civil War against the US backed Kuomintang, the invasion by Japan and, since 1949, the emergence of the People’s Republic of China. Quite different histories which explain in large measure the equally contrasting political systems. The coronavirus pandemic will stir debate about the automatically accepted argument that Western freedom serves the people better than China’s authoritarianism.

Graham Perry

October 2020

- Get Involved-

More articles

- I would love to here your thoughts on this! -

Latest article