China says its economic recovery is strong but new figures tell a different story. And if it is to truly thrive, it needs something Australia has in abundance.
China’s official figures say that industrial production has bounced back strongly and the construction industry is positively booming.
This serves to illustrate the increasingly two-speed nature of the Chinese economy. While heavy industry and construction continue to boom, the story told by the wallets of Chinese consumers is quite a different tale. In his last major speech as General Secretary of the Communist Party, Hu Jintao in 2012 called for economic reforms that would increase consumer spending, ultimately with the goal of reducing Beijing’s dependence on export and fixed asset investment driven growth.
Even Chinese Premier Li Keqiang recently acknowledged that there were issues with China’s ongoing economic recovery. During a meeting of the Chinese Communist Party State Council, Li conceded that consumer spending was the “weak link” in the economic recovery thus far. He went on to state that in order to increase consumer consumption, “we need to explore new methods”.
Despite an ongoing trade war between China and Australia, they’re still importing iron ore. Chinese workers at a port in Qingdao in China’s eastern Shandong province. Picture: STR/AFP/GettyDespite the overwhelming strength of Chinese industry and construction sectors, the less than stellar recovery being experienced by regular everyday consumers leaves the broader Chinese economy in a somewhat precarious position.
This is what has left China in the paradoxical situation it finds itself in. On one hand Beijing knows there are risks that come with another big cash splash and is attempting to be relatively thrifty where it can.
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