As we have forecast, the 20th century was the American century – the 21st century will be the Chinese century. The business of China is business; the business of America is war.
CHINA’S SPIKES 18 PERCENT IN FIRST QUARTER. China’s economy grew by 18.3 percent in 2021’s first quarter, compared to the same period a year earlier, the National Bureau of Statistics reported.
The performance was the largest year-on-year quarterly gain since China began keeping records in 1992.
The country’s March manufacturing output rose 14.1 percent against that of March 2020. Retail sales zoomed 34.2 percent as shoppers ventured out to malls, restaurants, and car dealerships.
For the first time in almost 30 years, China’s economy contracted during the first three months of 2020, then sprinted back as the world turned to its factories to supply everything from masks to computers after the West shut down for months.
Those factors drove China’s economy to grow faster than its pre-pandemic rate by the end of 2020. Indeed, it was the only major nation that registered a positive GDP in 2020.
“The monthly indicators suggest that following weakness in the first two months” of the quarter, Louis Kuijs, chief Asia economist at Oxford Economics, said in comments quoted by Germany’s Deutsche Welle news service.
TRENDPOST: While the U.S. GDP should catch up to its 2019 size by July as a result of record-low interest rates and President Biden’s recent $1.9-trillion stimulus, in China, industrial production, consumption, and investment all gained pace in the last quarter.
In contrast, the Eurozone’s economic output will grow only 4.5 percent in 2021, according to IMF, and not return to its pre-pandemic level until next year because of a double-dip recession in this year’s first quarter, thanks to a slow vaccine campaign that has led political leaders to continue business lockdowns.
CHINA’S ECONOMIC GROWTH RESTING ON EXPORTS, HOUSING. Although China’s exports grew 30.6 percent year on year in March, the volume of goods shipped overseas last month contracted by a seasonally adjusted 6.6 percent from February, Goldman Sachs calculated, as reported by the Wall Street Journal.
Exports rose by 8.5 percent across January and February.
March’s dip was expected because China’s New Year’s holiday last month briefly curtailed production and because American factories are coming back to life, meeting some demand that China has been supplying.
However, the latest round of U.S. stimulus spending and President Biden’s $2.3-trillion infrastructure proposal probably will speed demand for goods past supply, lifting Chinese export volumes higher, WSJ analyst Nathaniel Taplin wrote on 14 April.
Domestically, China’s economy rests more heavily on housing than officials would like.
Across 70 cities, home prices rose 0.4 percent from January through February, the steepest rise since August.
China’s regulators have been tightening controls over property developers so more credit would be available to other facets of the country’s internal economy.
So far, they have been less successful than hoped.
Tighter regulations strictly enforced could blunt the housing boom later this year and begin to fertilize other sectors of the domestic economy, Taplin wrote.
Otherwise, the housing market will likely continue to swell, starving other consumer markets and raising the specter of a bubble.
CHINA TO OFFER IS DIGITAL CURRENCY TO 2022 OLYMPIC VISITORS. China hopes international visitors to next year’s Beijing Winter Olympics will be able to acquire and spend the e-CNY, the country’s new digital yuan, Li Bo, deputy governor of the People’s Bank of China, said in an 18 April public statement at the annual Boao Forum for Asia that was reported by several news outlets.
The bank has conducted a real-world test of its e-currency several times in Beijing, Chengdu, Shenzhen, Suzhou, and other cities. The tests have shown the means of distributing and redeeming the e-money works with existing payment systems, the bank has reported.
Offering it to Olympic visitors would be the e-CNY’s first test with foreign tourists.
The bank hopes the e-CNY will eventually replace coins and paper money but is not a cryptocurrency, not designed like bitcoin, and not intended to challenge the dollar’s role as the world’s reserve currency, the bank has emphasized.
The c-CNY is intended for domestic use, Li said.
“Our goal is to allow the market to choose and to facilitate international trade and investment,” he added.
However, the bank is collaborating with its counterparts in Hong Kong, Thailand, and the United Arab Emirates, among other nations, to explore the use of the digital yuan internationally.
The bank will continue testing the e-CNY in more cities and more situations and strengthen its technological and regulatory infrastructure as well as its security protections, Li added.
The People’s Bank of China has set no date for a national introduction of its digital currency.
TREND FORECAST: As we have been reporting, China will be the first major nation that goes to digital cash. In the years to come, much of the world will follow (See our 28 July article, “FROM DIRTY CASH TO DIGITAL TRASH.”)
And, as we forecast, the more nations that go to digital cash, the stronger the crackdowns and regulations will be placed on cryptocurrencies that governments and their central banks will regard as competition.