A Chinese parable relates the tale of a farmer who wakes up one morning to find a herd of valuable wild horses stuck in the mud on his farm.
He refuses to celebrate his windfall, saying it is never easy to judge good or bad luck. Very soon, his son badly breaks his leg trying to ride one of the horses. Weeks later, a military general begins forceful recruitment of young men in the army. But his son is spared because of his injury.
Social media users in China are reminding each other about this allegorical story in their discussions about whether Donald Trump should be regarded as good or bad news for the Chinese economy.
Some economists believe that Mr Trump’s threats to China are being overstated saying China is quite capable of handing his threats that include declaring China a currency manipulator, investigating Chinese investments in US for possible wrongdoing and slapping a 45 per cent tax on Chinese goods.
Whatever Mr Trump does, the “Chinese renaissance cannot be contained, it has to be wisely apprehended so it takes our global village to another level of development”, David Gosset, the director of Academia Sinica Europaea at the China Europe International Business School, tells The National.
But other analysts point to the flow of bad news emanating from Beijing in the past week or so.
Hours before Mr Trump’s inauguration on January 20, Chinese authorities disclosed that the country’s economy had put in its worst performance in 26 years last year as it grew at 6.7 per cent.
The government also revealed China’s trade surplus fell for the first time in five years last year, slipping 14 per cent to US$510 billion. The country’s imports also slipped 5.5 per cent last year. Chinese exporters faced 119 anti-dumping investigations from overseas in 2016, an increase of 37 per cent compared to the previous year.
Foreign direct investments grew at 4.1 per cent reaching $118bn in 2016, which was far lower than the 6.4 per cent rate seen in 2015. And economic officials in Beijing recently said they expected a weaker performance in 2017.
Some analysts believe the GDP growth rate may have been even lower because of recent revelations about provincial and local governments fudging data. One of the major Chinese provinces, Liaoning, recently admitted that it had be faking growth data between 2011 and 2014.
Ning Jizhe, the chief of China’s National Bureau of Statistics, says today the economic figures are “truthful and reliable”. He adds that “statistics departments on various levels will also be strengthening the law enforcement, supervision, and checks on figures” and “resolutely guarding and preventing” the fabricating of data.
“Generally speaking, China’s economy was within a proper range with improved quality and efficiency,” Mr Ning says.
Analysts are awaiting the release of growth data from India for last year, which surged ahead of China in 2015. But there are doubts it has repeated the performance in 2016. The Indian economy has been badly hit by the recent government move to demonetise and replace some of the currency notes as a means to fight tax evasion and black money.
Mr Gosset says that Chinese companies may have to reorient their business if the Washington decides to put up serious restrictions on their businesses. They will may well look at the Middle East and other markets as more suitable areas for trade and investment.
“Chinese businesses will change their attitude towards the US. The Chinese market is vast, still with enormous untapped potential, and we live in a multipolar world – the world of the G20 not the G7/8 – in which alternatives do exist for Chinese investors – the Middle East, Latin America or the vibrant African continent,” Mr Gosset says.
“The main beneficiary of Sino-American commercial tensions could be the Sino-European partnership. The EU is a large market and it can provide innovative talents and ideas,” he adds.
China is the most important trade partner for many countries, which has resulted in a huge increase in its political clout.
“Chinese influence in Asean [Association of South East Asian Nations] has been buoyed by trade and investments, and even managed to counter the influence of the US and Japan,” says Thomas Eder, a research associate at the Berlin based Mecator Institute of China Studies.
Should Mr Trump implement his anti-China strategy, Beijing will be hoping those relationships and others will be enough to protect the country’s economy.
business@thenational.ae
Follow The National's Business section on Twitter
