Conflicting Forecasts on China's Economy 'Rebound vs Stagnation'... China Says "4th Quarter Recovery Accelerates"

Perspectives on China's economic situation remain divided both domestically and internationally. While Western forecasts anticipate a recession in China, the country criticized these views and expressed confidence that the recovery pace will accelerate further in the fourth quarter.

On the 20th, the State Council Information Office of China held a press conference explaining the recent economic situation, attended by officials from key macroeconomic agencies including the National Development and Reform Commission (NDRC), Ministry of Industry and Information Technology, Ministry of Finance, and the People's Bank of China. The Deputy Director of the NDRC stated at the event, "The greater the challenges we face, the stronger China's economic resilience will become," adding, "Despite the tsunamis of the 1998 Asian Financial Crisis and the 2008 Global Financial Crisis, China's economy not only withstood but also grew stronger." He explained, "There are sufficient reasons to believe that China's economy will recover and improve in the long term, as the policies introduced accumulate and positive factors increase."

[Image source= Xinhua News Agency]

The Deputy Director also noted, "There are many criticisms and voices against China both inside and outside," but emphasized, "Such claims have never materialized in the past, nor will they now or in the future." In particular, he stressed that there is no deflation, stating, "While some countries have experienced inflation rates exceeding 9% in recent years, China has maintained overall relatively stable prices."

Recent economic indicators from China have exceeded market expectations and shown improvement. Sales of durable goods, which had been sluggish, are increasing, and real estate transactions are picking up. According to the Shanghai Statistics Bureau on the 20th, real estate development investment in Shanghai from January to August this year rose 29.8% year-on-year. The construction area of commercial housing increased by 3.3%, and the sales area grew by 10.3%. The China Passenger Car Association announced on the same day that nationwide passenger car sales from September 1 to 17 reached 804,000 units, a 10% increase compared to the previous year. On a cumulative basis, 16,294,000 units have been sold this year, up 7% year-on-year. Industrial production and retail sales data for August released by the National Bureau of Statistics also significantly exceeded market expectations, increasing by 4.5% and 4.6% respectively compared to last year.

Tian Yun, an economist and former Vice President of the Beijing Economic Operation Association, predicted, "Considering the effects of policy measures, the economic recovery in the fourth quarter will be greater than in the third quarter," adding, "This trend will continue through 2024."

On the other hand, major foreign media outlets have repeatedly compared China's economic situation to Japan's "Lost Decade," suggesting it could worsen further. The Wall Street Journal recently argued that China's rapid aging and low birth rates, the risk of falling into the middle-income trap (losing growth momentum before becoming a developed country), and the inability to pursue aggressive stimulus due to large-scale debt pose significant risks. It also cited reduced foreign investment amid deteriorating U.S.-China relations as another risk factor.

Bloomberg News also expressed concern over the bleak economic outlook, noting that the number of U.S. companies optimistic about doing business in China is at its lowest in 24 years. According to a survey conducted by the American Chamber of Commerce in Shanghai among its members, 52.0% of U.S. companies responded that their outlook on business in China was optimistic or somewhat optimistic. This represents a 3 percentage point decline from 55.0% last year and marks the lowest level since the survey began in 1999.

Meanwhile, the Asian Development Bank (ADB) lowered its economic growth forecast for China this year from 5.0% to 4.9%. The day before, the Organisation for Economic Co-operation and Development (OECD) also revised down its growth forecast for China from 5.4% to 5.1% for this year.

This content was produced with the assistance of AI translation services.