How Is China's Economy Doing?

As usual these days, there is a major disagreement about an important international fact.  This time, the issue is just how well the Chinese economy is doing.  Supposedly, China's economy is growing at the rate of over 6% at least according to official figures.  Not too many people believe those figures, however.  What we don't know is whether the actual figures show China growing at 4%, 1% or shrinking in terms of GDP.  Any of those (or other) figures can be justified based upon recent events.  The Chinese government has shifted from tightening to reduce dependence on debt to a more accommodative policy to promote growth.  The Chinese currency has seen a decline of about 9% in the last few months.  Nine percent is hardly a collapse, but in terms of a major international currency, that is a really big move.  We could go into the weeds to discuss various other indicators, but the point is that there is a perceived issue with the rate of continuing Chinese economic growth.

So how important would a slowdown in China be to the world economy?  Remember, China has the second biggest economy in the world.  It is the world's biggest consumer of metals and many other commodities.  It is also a major user of shipping.  That means that a slowdown in China would have ripples (or even waves) throughout the world economy that could cause real harm.

That brings us to the second question:  is the slowdown in China the result of the trade war with the USA or merely a fortuitous coincidence that amplifies the effects of US actions on trade.  Again, we really don't know the answer because China's economic fortunes are so opaque. 

One thing that we all should know:  the question of Chinese economic performance is so much more important than the Mueller investigation and all the anti-Trump hysteria.  It could affect the lives of billions of people around the world.  Even so, the media hardly mentions it.