Changing narrative heralds a golden age

One of my first assignments at China Daily was to visit Guangdong province, which, as the world's leading manufacturing hub, had been badly hit by the global financial crisis.

According to some estimates, exports had slumped by as much as 30 percent in its immediate aftermath.

By the time I made my own personal southern tour in August 2009, things were more stable.

The story I was reporting on was about the labor shortage that had arisen as a result of migrant workers who had lost their jobs and gone home not being prepared to come back.

The government had responded to the overall crisis with the biggest stimulus package in financial history - using its vast foreign exchange reserves to invest 4 trillion yuan ($599 billion) into its economy.

The general feeling among government officials and businesspeople I met at the time was that from then on the Chinese would have to look inwards rather than outwards for the solution to economic problems.

The hope was that Chinese consumers would take up the slack from a lack of international demand.

I was reminded of this trip while reporting on China's recent second quarter economic data.

The headline, of course, was that after a strong first half performance - recording GDP growth of 6.9 percent - the economy was on course for an increase in its annual growth rate for the first time since 2010.

What caught my attention - and that of many others - as the fact that one of the main drivers of the faster growth was an 11.3 percent year-on-year rise in exports in June.

Better-than-expected global growth is again supporting the China economy, rather than acting as a drag on it.

China has again got back this vital economic engine. Some such as Li Daokui, the influential Chinese economist and director of the Center for China in the World Economy at Tsinghua University, believes the whole narrative about the China economy is about to change.

The assumption has been that as the economy matures China's economic growth must inevitably decline.

Li is now predicting a new "golden" era for the economy, with growth going above 7 percent - a rate last seen in 2014.

He argues that it is not only exports that will drive this but much more proactive local government policies after the 19th Congress of the Communist Party of China in the autumn.

"The economy will bottom out this year and regain strong growth momentum in 2018 and 2019, and possibly rise above 7 percent," he said.

Stephen Roach, senior fellow at Yale University's Jackson Institute for Global Affairs and one of the most respected China observers in the West, also says the China economy is proving all the doom-mongers wrong and is showing "impressive resilience".

"(The negative forces) have been more than offset by an improving global climate and the attendant impetus to Chinese exports, as well as the ongoing structural transformation of an increasingly consumer-led growth dynamic," he said.

The problem with analyzing the economy is that it is so unique in terms of scale and also its combination of State control alongside a dynamic private sector.

No other economy got this large without fully open capital markets.

Yet there is increasing confidence that many of the reforms put in place over the past five years are beginning to produce significant results. There is also much anticipation about a deeper reform agenda after the autumn meeting.

The ghosts of my own trip to Guangdong gradually seem to be being exorcized. Global demand is picking up and China is rapidly developing a new growth momentum of its own. The narrative is changing.

Contact the writer at andrewmoody@chinadaily.com.cn

(China Daily 08/10/2017 page2)