China Economic Forecast 2021
While China launched the deadly Corona Virus plague around the world, it is becoming one of the few to escape the pandemic economically.
China’s economy was looking dour during the summer of 2020 and forecasts were for a 4.4% decline in GDP for 2020. New forecasts are for up to 9% growth for 2021.
Yet, the communist regime came down hard on Covid 19 transmission across the country and it’s miraculously saved their economic outlook. The country’s Hang Seng index has thrived, particularly when the US stock market has floundered and upon President Trump’s defeat.
Hang Seng Stock Index 5 Year Performance
After bungling the virus breakout in Wuhan, it looked like the end was coming for the communist party. With President Trump’s loss, there is great expectation that exports to the United States will begin again soon. Yet, as weak as Joe Biden’s position on China, his embarrassment about the softness may cause him to react against easy imports.
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 will result in significant trade tensions. Joe Biden has the difficult position of having to admit President Trump’s intention and opinion of China’s economic aggression was valid.
China GDP Growth History Timeline
While China’s economic progress is notable, the expectations of easy access to pandemic damaged economies around the world has to be put into question.
China’s Real Negative Growth Rate
In typical fashion, China’s leaders had withdrawn estimates of GDP going forward. They had forecast a 6% growth rate for 2020, but has since been released. Any long term estimates of China GDP growth have to take political fallout into context, and to any law suits the country faces. The leaders are hoping to escape the pandemic period unscathed, aided by extremely short term memories.
The irony of the Wuhan originated global recession is that China will be dependent on all the nations it infected the Virus, it’s illustrious leaders claim came from the US. Since most countries are still locked down, there is little hope for booming imports of China manufactured products.
As 2021 enters, it will be interesting to see what each country legislates regarding China and it’s products.
The slow reduction of US economic 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, Uighur imprisonment, or China’s coverup of Covid 19, nor reacting to Beijing’s accusation that the US launched the bat virus. China definitely has the support of the democrat run media, but it will cause the media outlets great stress to keep all of this hidden.
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.
China’s communist leaders are adjusting to the new global economy and managing their slumping economy and rising tension with the U.S. by boosting stock trading and raising stock price limits.
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 were few takers on that theory, although the Democrat media stayed distant from any criticism or review of China during 2020.
Those statements increase American resentment, and within other nations too. It’s irresponsible and evil to have made 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
China is bracing for an expected spate of Corona Virus lawsuits from individuals and countries around the world. Persistent lawsuits in International courts could be a continuous public relations problem that will require diplomatic repression. We’ll see what the WTO rules in regard to its favored “developing nation.”
These suits in International courts have to be defended in order for China to continue exports. With the Dems in however, all suits might be dismissed. Those lawsuits arise from the human and financial damage the Covid 19 virus has exacted on their societies.
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.
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).
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, not even Trudeau 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:
- high persistent unemployment rates
- embarrassment over continued currency manipulation
- lawsuits regarding the Corona Virus concealment
- resentment over China hoarding of PPE before and during the pandemic
- broken relaitons with many countries
- US resistance to China’s military expansionism
- the growing movement to oust the communists from power
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.
Global Economic Outlook
Fitch Ratings raised its 2021 global growth forecast to 5.3% (from 5.2%). They forecast weakness in the next 3 months, followed by improved economic output throught the 2nd half of 2021. They predict the US GDP will expand by 4.5% and GDP in China grow by 8.0% (up from 7.7%) while the Eurozone could grow only 4.7% (down from 5.5%).
Fitch raised its global GDP growth forecasts for 2022 to 4.0% from 3.6%. This is due to anticipated to lower social distancing blocks on retail and business as the vaccinations are conducted.
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 is concerned only about its own internal political challenges.
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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