Great Power Cooperation? China’s Faster Growth Lifts U.S. Trade
April 18, 2018 (EIRNS)—China’s reaccelerating economic growth, combined with its performance of the commitments President Xi Jinping made to President Donald Trump at their 2018 summit in Buenos Aires, have “paused” what was a decline toward recession from Trump’s two years of industrial recovery. This is now the view of many U.S. economists and financial analysts—ironically, while some of the same economists claim the Chinese upswing is entirely caused by unsustainable government credit and won’t last, and still others say they don’t believe China’s figures!
Those data, released by the Commerce Ministry April 17, included first-quarter industrial production up by 6.5% from the same quarter of 2018 (compared to just 5.9% in the last quarter of 2018 from the last quarter of 2017). Retail sales were up 8.7% (compared to 8.1%); fixed asset investment up 6.3% (compared to 6.1%); property investment was up 11.8% (compared to 11.0%); surveyed unemployment was 5.2% (compared to 5.3%). The economy as a whole expanded by 6.4% (compared to 6.3%).
Along with the reaccelerated growth in China goes the prospect of a U.S.-China agreement on trade. China’s first-quarter exports also rose compared to the 2018 first quarter, but fell to the United States, by 3.6%. American exports to China rose 21%, from a big increase in semiconductors exports to soybean sales and aircraft. Consequently the U.S. trade deficit fell in January, and then dropped sharply in February, below $50 billion at $49.1 billion; and the trade deficit with China fell to $30.1 billion, nearly $8 billion below what it was running last summer and fall.
President Xi’s commitments to President Trump from Buenos Aires are clearly being carried out. This will save U.S. first-quarter GDP growth from falling below 2% annual rate. China’s export growth is coming from countries of the Belt and Road Initiative, while world trade as a whole actually fell in the period through January, according to data from the Netherlands Bureau for Economic Policy Analysis.
Reuters reported April 16 from “two sources familiar...” a story really not exclusive or new: The U.S. trade negotiations team has made significant concessions on the attempt to get China to stop industrial subsidies, and on the so-called enforcement mechanism, after China made legal changes regarding industrial property rights and joint-venture requirements. Thus an agreement has come nearer.