As 2014 came to a close, the economic figures from our world's two
superpowers cut a stark contrast. For the United States, the recession
appeared to finally be ending, as the Commerce Department announced a
third-quarter gross domestic product increase of 5 per cent -
exceeding expectations and marking America's strongest quarter of growth
since 2003.
Meanwhile, on the other side of the Pacific, China spent the latter half of the year hurtling towards its own milestone. GDP growth rate is expected to fall below the 7.5 per cent target, the first year since 1998 that Beijing would be unable to meet its target rate.
Given these reports, it might look as if 2015 could have the potential to be a turning point, one in which the commercial paradigm of our time, that of an ageing American eagle and a soaring Chinese dragon, could change.
While such a conclusion might appear straightforward, it would be naive and misleading. As any seasoned entrepreneur would espouse, it is not what a company or organisation has that matters, but rather what they make of it. And nations are no different, as current economic realities are better reflected not by percentage changes in GDP but by capitalisation - by how China and the US deal with the circumstances they face. Under that metric, Beijing is immensely better off.
Making assumptions from a slew of disappointing statistics would ignore the extraordinarily aggressive menu of economic policies and reforms President Xi Jinping's government enacted or announced last year, all of which actively work to solidify China's economic foundations and ensure at least some degree of prosperity over the long run.
Last February, the People's Bank of China allowed a decline in the value of the renminbi that led to three record-setting trade surpluses last year. Last November, the PBOC cut interest rates for the first time since 2012, which not only sent Shanghai's stock market on a run, but should also be effective in easing refinancing costs and debt loads for Chinese companies and bringing China one step closer to long-awaited interest rate liberalisation.
Finally, in December, the PBOC announced it would change the calculus for loan-to-deposit ratios, a decision which analysts said would be equivalent to injecting an additional 1.5 trillion yuan (HK$1.9 trillion) into the banking system.
This proactivity extends far beyond monetary policy. Xi's proposed Asian Infrastructure Investment Bank, due to launch this year, is emblematic of Beijing's newfound role as a global lender of last resort, a position that comes with expectations of loyalty, support and, most significantly, future trade and investment from aid recipients.
Read more:> Don't judge the Chinese and US economies just by the figures | South China Morning Post
Meanwhile, on the other side of the Pacific, China spent the latter half of the year hurtling towards its own milestone. GDP growth rate is expected to fall below the 7.5 per cent target, the first year since 1998 that Beijing would be unable to meet its target rate.
Given these reports, it might look as if 2015 could have the potential to be a turning point, one in which the commercial paradigm of our time, that of an ageing American eagle and a soaring Chinese dragon, could change.
While such a conclusion might appear straightforward, it would be naive and misleading. As any seasoned entrepreneur would espouse, it is not what a company or organisation has that matters, but rather what they make of it. And nations are no different, as current economic realities are better reflected not by percentage changes in GDP but by capitalisation - by how China and the US deal with the circumstances they face. Under that metric, Beijing is immensely better off.
Making assumptions from a slew of disappointing statistics would ignore the extraordinarily aggressive menu of economic policies and reforms President Xi Jinping's government enacted or announced last year, all of which actively work to solidify China's economic foundations and ensure at least some degree of prosperity over the long run.
Last February, the People's Bank of China allowed a decline in the value of the renminbi that led to three record-setting trade surpluses last year. Last November, the PBOC cut interest rates for the first time since 2012, which not only sent Shanghai's stock market on a run, but should also be effective in easing refinancing costs and debt loads for Chinese companies and bringing China one step closer to long-awaited interest rate liberalisation.
Finally, in December, the PBOC announced it would change the calculus for loan-to-deposit ratios, a decision which analysts said would be equivalent to injecting an additional 1.5 trillion yuan (HK$1.9 trillion) into the banking system.
This proactivity extends far beyond monetary policy. Xi's proposed Asian Infrastructure Investment Bank, due to launch this year, is emblematic of Beijing's newfound role as a global lender of last resort, a position that comes with expectations of loyalty, support and, most significantly, future trade and investment from aid recipients.
Read more:> Don't judge the Chinese and US economies just by the figures | South China Morning Post
No comments:
Post a Comment