Economics

La croissance mondiale et la Chine

Aug 29, 2016 Stephen S. Roach

NEW HAVEN – Malgré toutes les inquiétudes suscitées par le fameux ralentissement économique de la Chine, cette dernière reste le principal artisan de la croissance du PIB mondial. Sa contribution est d'autant plus importante que l'économie mondiale tourne au ralenti et ne pourra probablement pas résister à une crise d'envergure sans verser dans une nouvelle récession.

Quelques chiffres pour illustrer cette situation. Si la croissance du PIB de la Chine atteint l'objectif officiel de 6,7% cette année - ce qui est légèrement supérieure à la dernière prévision du FMI de 6,6% - elle comptera pour prés de 39% de la croissance mondiale (soit 1,2 points de pourcentage de la croissance du PIB mondial qui devrait s'élever à seulement 3,1% cette année selon la prévision actuelle du FMI).

En comparaison, la contribution des autres grands pays est minime. Ainsi la croissance du PIB des USA dont on vante la reprise devrait atteindre à peine 2,2% cette année - une contribution de seulement 0,3 points de pourcentage à la croissance du PIB mondial - soit environ le quart de la contribution chinoise.

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0 Comments on this paragraph, 18 Comments on this article

Robert Thomas Sep 6, 2016

Stephen Roach is vastly over hyping the importance of China's GDP growth on the rest of the world. It is a truism to say that China makes up a large part of the figure for world GDP growth but that is a fairly meaningless figure. China does not contribute anything net to the rest of the world's economic growth; admittedly it provides an enormous market for the commodity producing nations of the world but it's vast and growing exports are a detractor from growth in the developed markets. A slowdown in China's economic growth would have very little effect on the developed economies.

RT
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Thinking Indian Sep 5, 2016

Thanks to its low base, India has potential to grow at double digits, if only its leaders agree on rapid reforms , which are hampered by petty politics. GST tax reform is finally happening after a decade long struggle. Land acquisition reform is half done. Labor reforms moving slow, thanks to leftists. Most parties are refusing to accept election funding reforms, a major source of political corruption. Public sector struggling due to political interference. Still India contributes 0.6% to world growth, second highest after China.
- Vipin Nehra Nov 7, 2016
  
  Sorry dear Thinking indian, the land reforms are not land reforms, these are the land grab greedy plans of the industrialists. Should be fought tooth & nail..!!
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- Robbie Jena Sep 5, 2016
  
  We were trying to provide massive energy developments for India and hence Pres. Obama went there in January, 2015. The Minister was told about it but did not support the energy plan and hence nothing came out since then. So, the Government needs to get more in to it.
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eusebio manuel Sep 4, 2016

G20 Happy Green Science health and human rights
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Robbie Jena Sep 4, 2016

Rather than China taking the lead and getting all the marbles, We can do this too. Need groups to jump in. Let me know on Industrial Ecosystems that was implemented in China and does work very well. Thank you.
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Richard Solomon Sep 4, 2016

I wish I could be as optimistic as Mr. Roach is about the PRC's ability to address 'both short term cyclical pressures and longer term structural reforms successfully.' So far it has not demonstrated that it is capable of doing this. How much more debt can it tolerate before it begins to sag under the weight of it? Or can it continue to manipulate its currency without causing undue social unrest?

Mr. Roach also fails to address two related issues. First, the social unrest lying not far below the surface is partially the result of growing income inequality and ongoing lack of economic opportunity for its rural citizens.Many of those who live in the large cities are doing pretty well. Those who live in the countryside and cannot legally, easily emigrate to the cities are still quite poor. How/when does the government address these issues? Second, what about its energy policies? IF it continues to rely on coal as its major way of generating electricity, the country will live in a cloud of smog. And it will exacerbate the climate change challenge which it, and the world, is facing.
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Steve Hurst Aug 30, 2016

'Global Growth – Still Made in China'

As though everything made in China is good
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Craig Stevenson Aug 30, 2016

No one in the world wants will happen to China, but it doesn't matter what anyone wants or believes; framing from complex adaptive systems rather than positive psychology is more useful when understanding economics and global systems.

Still developing, yet such levels of debt to GDP.
Still ow median and mean salaries when such levels of debt, such growth in salaries, such a proportion of recent headline growth across these as the prodctivity of capital has fallen, in porportion to rise in nminal figures across categories (as debt fueled investment has risen, where some believe there hasn't been need for rising levels of investment since before 1998).

Do distrust their figures, there has been no rebalancing, but in terms of magnitude of financial repression, as this has happened, infusions of capital to re-green loans, along with turning trillions of recent local debt to bonds, and rise of shadow.

Demand institute has there 2013 consumption to GDP at 28%.
China has most recent at 64%, many should know the disagreements related to how they consider consumption including many investment goods. But certainly is difficult to imagine a consumption figure above wage share, which is low, due to percentage of economy that is investment.

So, investment, does anyone actually believe that when investment hits a wall that wages will hold their recent gains.

Conside rthe pace of their debt accumulation they will achieve Japanese debt levels in a few years, far less than the 25-30 years it took the Japanese. Can anyone imagine the Chinese reckoning t be as successful as the Japanese in a world of lessening trade and collapsing dmegraphics in the regions f the world that have long been the primary providers of net final goods demand, espcially when nominal figures regarding wages are actually, even at the highest of averages, Shenzhen, Shanghai, Beijing, what a person on unemployment would receive in less than 4 months in the US.
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yw yap Aug 30, 2016

Gotta thank Mr Stephen Roach for highlighting salient points. Going fwd I guess it will less likely be a "Us & Them" situation as Chinese bizs integrate with global economy at multiple levels. Chinese are putting in investments in large MNCs, in foreign lands, and Chinese-owned bizs are engaging foreign brains for inputs.
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tom bergerson Aug 29, 2016

The fact that China is such a large part of global growth is what is scary. Sure they look to have bought some more growth this year by creating yet more trillions of dollars of debt with much of it going to roll over existing bad debt to forestall margin calls, and sure they can do that for a long time in a quasi-command economy. But one can be fairly certain they do not really know what they are doing and that at some point it will unravel. That much debt (north of 30 trillion dollar) in under a decade must inevitably result in a credit crisis. When that comes, then global GDP not only doesnt have a positive contribution from China but a negative one. Rue that day.
- yw yap Aug 30, 2016
  
  dear Tom,
  Going fwd many things are scary, incl. ISIS overrunning ME, EU collapsing with Brexit really occurring, or US electing Trump. Guess shouldn't we just be happy NOW that we aren't falling?
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ROHIT CHANDAVARKER Aug 29, 2016

One needs to take the figures put out by China with some doubt. There is a case for closer monitoring of the growth figures released by Beijing.
Secondly, one needs to factor in Debt to GDP ratio in the overall analysis. Of particular note is the local level & municipal debt which is estimated at more than 200% of GDP.
Thirdly, the transition from investment led growth to consumer led one has been painful so far but it is hard to predict the extent & depth of the pain that is still left.
Fourthly, one wonders how the Chinese policy decisions would be made considering the ham handed manner in which the currency crisis & the stock market fall was handled or mishandled.
Global growth has shown no signs of determined revival & in such a scenario, Chinese exports would be hit thereby reducing export revenues resulting in currency gyrations. Any move towards devaluing the renminbi by China would result in competitive devaluation leading to difficult currency crisis.
Hence, even though China is powering global growth there are ominous signs indicating turbulence ahead. And this could be of China's doing.
The forthcoming G20 summit in China was to have been China's crowning moment but is likely to be overshadowed by the intransigent behaviour by Beijing towards the SCS dispute. The Western powers are bound to raise this issue thereby precluding any effort made by Xi Jinping to focus on China's primacy on the global economic scene. Hence one expects little of substance on world's economy from the China summit leading to further uncertainty.
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Paul Friesen Aug 29, 2016

China is still benefiting from its policy decision back in 2008 to provide a really big fiscal stimulus package to counter the effects of the sub-prime meltdown. It was about 15% of its GDP, while other countries seldom provided more than 2%, and it helped not only China, but the commodity exporters who supplied it.

If only we could learn from this example. When monetary policy runs out of steam at the zero interest rate, you need to use fiscal policy. Seems like a no-brainer to me.
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Craig Stevenson Aug 29, 2016

Succesful rebalancing is in balancing to domestic drivers of growth.
It seems the author conjectures, essentially to consumption as a component of GDP. It is strange how the author commends the contribution to global growth, when the nature of that contribution, the run up in investment, sees the very rebalancing he imagines could lead to China as a mass importer, be undermined due to the inability of CHinese consumers to consume in the proportions he imagines.

Simply, as investment rose as a share of GDP, growth increased and they imported more natural reosurces due to the nature of growth (heavyily capitla and resource intensive).

That did two things, it saw rises in incomes due to continued GDP growht and mass amounts of capital slosshing around. It also saw consumption as a share shrink.

What does the author think will happen as investment as a share of GDP falls......well, incomes will fall, GDP headline numbers will fall, and does he think that China, in a worse position than Japan in the late 1980's, early 1990's can even be as susccessful as Japan, which had the Tigers, China, Eastern Europe, and elsewher e growing, in a world of dmeograhic decline in the areas that consume final good products, while there has been over-investment in extractive globally, production globally, as the advanced world faces slowing consumption do to againg, and high population growth in very poor regions of the world, coupled to over-investment elsewhere, ensures no new green shoots.

Wake up financial-techno-international globalists, your delusions have killed global devleopment.
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Craig Stevenson Aug 29, 2016

RE Gingery:

FDI
Export Rebates
Low-Cost, No-Cost Loans
Tax Abatements
Support for worker housing and food, transportation

Internal
Re-greening of Loans
easy access to capital for (state supported org's, not just owned)
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Craig Stevenson Aug 29, 2016

Has anyone noticed that this contribution to global growth notion, is a term that has arisen since the beginning of the GFC, which seems to confound the issues at hand.

It's sounds to me like the Miss Personality award at a beauty pagent.

Why not percentage of final user demand.
Or the countries that least seek to attach themselves to others demand by restraint (refusing to use blatantly non-free market policies to gather treasure and distort the global development project)
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Walter Gingery Aug 29, 2016

"Chinese domestic demand has the potential to become an increasingly important source of export-led growth for China’s major trading partners – PROVIDED, of course, that other countries are granted free and open access to rapidly expanding Chinese markets."

That's a big IF. Moreover, the author doesn't address the question of the extent to which growth in the Chinese economy -- and hence Chinese employment -- is bought by exporting unemployment to other countries by such policies as financial repression, suppression of labor unions, political persecution, capital controls, etc.
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