China Economic Forecast 2020

China Economic Forecast 2020

China Economic Forecast 2020 2021

China’s once robust economic machine which doubled its size in the past decade, is facing severe headwinds as we pass through mid 2020. In fact, China looks like it’s heading for a crash.

Of course, no one wants a global recession but in fact, the Corona Virus has actually done what experts predicted.

 

After bungling the virus breakout in Wuhan, China’s leaders are pushing the country into a dangerous situation economically. It appears to be the communist leader’s own isolation, ideology and near sightedness that is bringing the country into spats with nearly every country. India is in the spotlight now.

Although China insists on its right to export to the US, it is actually a privilege. The country’s unwillingness to reciprocate as good countries do, that’s creating deadlocks that will lead to China being shutout.

Growth Forecasts Being Slashed Weekly

Forecasts for China’s economic growth have been slashed again, and completely recomposed. All the bad news is accelerating a severe conflict between the free nations (including the US) and China’s communist leaders. This and outrageous debt will be the source of GDP deceleration.

Indebted nations won’t be able to buy China’s goods unless they mortgage away parts of their country (something the US has already done in the last 12 years).

No one can forecast China’s GDP numbers accurately because of the political element and to China’s covering up of facts. The post Corona Virus global economy looks very different and China won’t be the benefactor. China’s place in it is being completely rewritten. If a Covid 19 Virus vaccine is discovered, it won’t change this direction. In fact the transition was already in progress and the Communist leaders knew where it will go.

China’s Real Negative Growth Rate

In typical fashion, China’s leaders have withdrawn estimates of GDP going forward. They had forecast a 6% growth rate for 2020, but that’s been tossed aside for more obscure reporting methods. Any long term estimates of China GDP growth have to take political fallout into context, and to law suits the country faces. China won’t escape this mess unscathed.

The irony of the Wuhan originated global recession is that China will be dependent on all the nations it infected the Virus, it claims came from the US. Since most countries are still locked down, there is little hope for booming imports of China made products.

The slow reduction of US dependency on China could take a year or two, but most nations know they must consider their own national security which was widely exposed in the last few months.

As we discuss here in this post, the worsening China US Trade war is bringing more serious threats of retaliation from China. However, without the US consumer markets, China will find itself with meager GDP and sales numbers. The EU looks like it’s in a bad mood too and most EU nations don’t have money to spend.

How’s China’s Economy Performing Lately?

According to Carnegie Endowment’s Yukon Huang, China’s retails sales fell by 20.5% and industrial production dropped by 13.5% during February alone. We have to wait for reputable reports of March, April, and May, 3 months which will be sobering for them.

The EU, and US economic numbers are much worse due to the shutdowns in comparison so it would appear Beijing took measures to save its own people and economy from the ravages of Covid 19, while not being conscientious of other country’s rights.

And we’ve all suffered badly these past few months while not knowing when this nightmare will be over. This emotional distress has to play into the economic picture too. Yet, you won’t see these factors taken into account as trade negotiations resume and US media covers the events.

The $500 Billion a year trade deficit that’s marring the US economic forecast has to be acted on regardless of whether President Trump wins a second term or if China is forgiven for the spread of the virus.

The US media has been easy on China, reluctant to spend any air time on the Hong Kong conflict or China’s coverup of Covid 19, nor reacting to Beijing’s accusation that the US launched the bat virus. If China loses support of the mainstream US media, it won’t have a leg to stand on.

It’s this political mess and the China US trade war will ensure there is no big recovery in China. China’s customers are still in lockdown or in hospital or the morgue. Any suggestion the world is ready to import massive China made products again is ludicrous.

Propaganda Simply Not Trusted Anymore

Although Chinese leaders have tweeted that the origin of the Corona Virus was in the US — injected by the US military, there are few takers on that theory. Strangely, it appears Twitter did not censor those social media posted statements!

Those statements increase American resentment, and within other nations too. It’s irresponsible and evil to make that accusation. Yet they have reiterated how transparent and responsible they were in reporting the virus threat last fall.

Law Suits Could be Significant Stopper of China Exports

Instead China is bracing for an expected spate of Corona Virus lawsuits from individuals and countries around the world. These suits in International courts have to be defended in order for China to continue exports.  Rulings would go against them otherwise.  The suits arise from the human and financial damage the Covid 19 virus has exacted on their societies.

South China News reported the possibility that the US may cancel repayment of $1 Trillion it owes to China. And it may reduce its purchase of US debt in future. This battle with the US comes at a time when China has few friends in the world community (except Russia, who today said China can do whatever it wants within its borders, regardless of the agreements it signed).

Canada Getting Pulled In Way Over its Head

Even tiny Canada is now distancing itself from the China communist regime. Justin Trudeau previously bent over backwards for China and distanced himself from the US. Now in speeches he’s saying China’s system is just different and they will likely not win the legal battle.

Screenshot courtesy of CBC.

Canada is dealing with the arrest of Huawei Founder’s daughter (living in Vancouver BC) who is charged by the US with trading with an enemy state (Iran).  Now that she’ll be extradited to the US to face charges, China could launch embargos on Canadian products, which they’ve done previously.

China has taken two Canadian hostages over the arrest of Meng Xanshou. This could end Canadian/China relations completely and the two men could be executed on spying charges.

In a choice between the US and China, no Canadian government would side with the Chinese communist leaders now.

China’s outlook is severely dampened by sketchy trade deals with the US, Australia and China. And let’s not forget the resentment from years and years of intellectual property theft and forced technology transfer. The list is too long to get into here.

China right now is facing:

  1. high persistent unemployment rates
  2. lawsuits regarding the Corona Virus concealment
  3. resentment over China hoarding of PPE before and during the pandemic
  4. resurgence in Covid 19 infections
  5. inability to manage hundreds of millions of unemployed workers

The US stock market rise was severely criticized for that performance yet at the same time, China’s stock markets have seen robust price growth yet were not mentioned negatively by the media.

China’s 1st Quarter GDP

Because of the US-China trade war, the downward pressure on China’s economy has increased significantly, and the employment situation has continued to deteriorate,” wrote Ouyang Jun and Qin Fang, two economists from Southwestern University of Finance and Economics in Chengdu, in an article late last month. — from article on SCMP.com

China reports an unemployment rate of 5.9% which seems highly unlikely given factories are shut down, workers laid off, and exports have completely stopped. China’s unemployment reports do not include 149 million self-employed people and 174 million migrant workers.

Global Economic Outlook

Fitch Ratings gives their outlook in a post: “We have further lowered our global GDP forecast for 2020 to -4.6% from -3.9% in our late-April Global Economic Outlook (GEO) update. This reflects further cuts of more than 1pp to our eurozone and UK forecasts to around -8% and, most significantly, a 2.6pp cut to our forecast for emerging markets (EM) excluding China.” — from fitchratings.com/research/ report of May 25, 2020.

In one short period, all of the economic forecasts for China for 2020 to 2024 are expired. In fact, China’s real economic outlook may be more grim than the media or OECD might want to admit. They’re likely unsure of what a world economic map with China cut out of it will look like and operate.

The EU too won’t be sympathetic to China as it faces its worst economist outlook in almost 100 years. The rest of the world won’t look kindly on their economic plight while China sees itself come out unscathed.

The Hong Kong Invasion: Treaties Not Honored

China’s economic outlook will be impacted by the coming US trade war, fueled by its invasion of Hong Kong against the treaty it signed in 1997. It’s already being condemned by the world community, and China doesn’t like backing down on its policies.

The end result is a temporary global recession followed by a strong economic rebound as each country rebuilds its own manufacturing and production infrastructure. Building that infrastructure in the US could lead to an economic boom in the US by 2022.

The end of the China production era then means good economic prosperity for the US and its allies. The bull stock market run will continue with ups and downs and the American spirit will fully return. US investment in China and its supply chains will be forgotten as time moves on.

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See more on the US stock market forecast, housing market predictions, and the US economic turnaround.

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