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Should we be worried by economic warnings of a bear in the China shop? | George Magnus

Discussion in 'Market News' started by Lily, Jan 20, 2016.

  1. Lily

    Lily Forum Member

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    It suits western policymakers to caution that China is darkening the global financial outlook – but the country is unlikely to go into imminent deep freeze
    China is making headlines – but not for the best of reasons. It just recorded its lowest growth rate – 6.9% in 2015 – in more than 20 years, but even this is thought to be exaggerated. A lot of western policymakers, including George Osborne and Mark Carney, have warned that China, the world’s second largest economy and biggest export nation, is darkening the economic outlook. This is only partially true, not least because China isn’t going into the deep freeze in the next several months. Yet it could well be heading for some sort of financial crisis in the next two to three years. So how worried should we be?

    You can’t separate economics from politics, especially not in China, and the most remarkable phenomenon in recent times has been the enormous centralisation of power around President Xi Jinping, which is unprecedented since Mao Zedong, along with mounting signs of political and social repression. But the Chinese economy today is much larger and more complex, demanding a governance system that’s anything but this form of political control.

    Related: China economy grows at slowest pace in 25 years, latest GDP figures show

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