Read on Twitter
Ok, I'll bite.
On the whole, China's economic performance in 2020 was, I'd argue, actually quite good. Not to dismiss its many problems (debt, inequality, statism, etc), but in the midst of a global pandemic, delivering growth was a real accomplishment... (1/x) https://twitter.com/michaelxpettis/status/1351058958925111296
On the whole, China's economic performance in 2020 was, I'd argue, actually quite good. Not to dismiss its many problems (debt, inequality, statism, etc), but in the midst of a global pandemic, delivering growth was a real accomplishment... (1/x) https://twitter.com/michaelxpettis/status/1351058958925111296
The various problems identified by Michael Pettis are real but also partly explained by the highly unusual circumstances. First, how unhealthy was China's recovery? Yes, it's true that debt-to-GDP levels soared. But they have literally everywhere. (2/x)
Indeed, the full-year increase for China's debt level may be a bit lower than the preceding chart thanks to strong nominal growth in Q4. And slowing credit growth at the end of last year already points to a stabilising debt trend (possibly) this year. (3/x)
How unbalanced was China's rebound? Yes, industrial production outpaced retail sales--reflective of weak consumption. But if you use retail sales vs industry as a proxy for economic balance, you'd have to argue that China had steadily improved for the full pre-covid decade! (4/x)
To be clear, the slowdowns in consumption and income growth aren't good to see. But these have been overwhelmingly caused by the pandemic. When people basically cannot travel and are still reluctant to go to cinemas and restaurants, consumer spending is bound to take a hit. (5/x)
And many in the services sector, especially those on low wages, have suffered as a result of these pandemic-induced shifts in spending. The government could, and should, have done more to provide income support to its people. https://twitter.com/S_Rabinovitch/status/1351008869045178369 (6/x)
Nothing, however, can substitute for a full-stop to the pandemic. The best economic policy in 2020 was to get as close to a full-stop as possible. The countries that have come closest to achieving that (eg, China, Taiwan and New Zealand) have been the strongest performers. (7/x)
That, for me, is the clearest and most important takeaway from China's GDP data. (8/8)
