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China Econ

No Collapse

No China collapse – the economy is slowing, but also becoming more stable

One of China's top government officials, Premier Li Keqiang, is reassuring markets that his country will avoid a much-feared "hard landing" as economic growth slows.¶ Worries have swirled for years that China could take a dive after decades of booming economic growth.¶ Indeed, China's economy expanded at its slowest pace in more than two decades in 2014 -- 7.4% instead of the government's target of 7.5% -- but Premier Li characterized the growth as "medium to high speed."¶ "China's economy has entered a state of 'new normal'," the premier told a packed audience at the World Economic Forum in Davos, Switzerland.¶ The premier compared China to a fast-moving train, saying it still had speed and momentum, but was becoming more steady as the country introduces economic reforms.¶ Those reforms are intended to boost entrepreneurship, encourage healthy competition and protect intellectual property, among other things.¶ Premier Li reassured the audience that his country was happy to have slower growth, so long as it was solid and stable.¶ "Regional or systemic financial crises will not happen in China," he said.¶ China continues to face a number of long-standing risks, such as ballooning government and corporate debt and a weak property sector.¶ In the face of a sustained downturn, the government has deployed incremental measures to boost the economy. Beijing has accelerated infrastructure projects, cut interest rates and tried to bolster the flagging property market.¶ China averaged economic expansion of around 10% a year over the past three decades, pushing it up the list of biggest economies and boosting household wealth.

No impact – China won’t collapse and even if they did, the government would intervene

Roney 14 [Tyler Roney has worked for numerous publications and media outlets in China as an editor and journalist, including China Radio International and the Global Times. “Stop Predicting China's Economic Collapse”, 8-1-14, http://thediplomat.com/2014/08/stop-predicting-chinas-economic-collapse/, msm]

¶ This spring and early summer were full of reports that China’s economy — and the dangerous political clout that comes with it — were ebbing. Some were even predicting that the Dragon Economy would collapse altogether and that it would take the world with it in its spiral toward oblivion. But despite these predictions of an economic doomsday, things are looking up this month. Manufacturing surged in July, indeed, rising faster than it has in the past two years. The purchasing managers index (PMI) hit 51.7 last month — the best since April 2012. Any number above 50 indicates growth, but the larger picture shows more than growth; it shows momentum. The main reason for this bump comes in the form of government policy, from boosting spending on railways and social housing to tax breaks for small enterprises.¶ ¶ Yes, China’s “Protect the Eight” is now “Protect the 7.5″, but it’s to be expected. Small things like China’s first bond default back in March caused a bit of mild suspicion and panic; in reality, China was just letting the market do what it does (onlookers can be forgiven for not recognizing this rare sight). Companies are learning their lessons and running from the Chinese “Debt Trap” in unusual ways, and the race to create a consumer culture is taking hold. Gordon G. Chang’s infamous and now proven incorrect book The Coming Collapse of China — a favorite whipping boy for pro-China nationalists — included very real worries, positing that China’s sluggish state-owned enterprises (SOEs) and bogus loans would wreak havoc in five to ten years. That was in 2001 — 13 years later “the coming collapse” still hasn’t arrived. In short, whether people are baffled by China’s numbers, angry over the effect China is having on their countries, or just fed up with the Communist Party’s grandstanding and human rights violations, their concerns haven’t translated to economic failure.¶ ¶ Of course, the lynchpin of the supposed collapse is the Chinese housing market. Fear of shadow banking, unregulated and sometimes unreasonable construction, and the outright cost of all this development (all legitimate worries) has had many wondering when the Chinese housing market is going to collapse and take world markets with it. However, China’s housing market simply defies prediction and common sense. Supposed bubble burst after bubble burst, the market remains reliable, and this is due in no small part to the tightening and loosening of government policy. Chang has been at the head of the housing doomsday brigade, and there’s nothing really wrong with that; pointing to systemic flaws is important. But catastrophic collapse does seem increasingly unlikely.¶ ¶ On housing, the government knows it’s in a bit of a pickle — they have to keep building because it makes up such a large portion of the GDP but building could cause the bubble to finally burst big time. It’s true, China has built too much, but the likely reality is that prices for properties and construction will drop, which will keep China away from the constant predictions of a doomsday scenario. And it did look like doomsday to some. But today, the doomsday predictions for China seem more and more like wishful thinking. While the numbers may point in the direction of worst case scenario, China’s authoritarian government is always quick to act.¶ ¶ Back in May, when people were worried the bubble had already burst, Matt O’Brien commented in The Washington Post: “Hopefully, the rest of the world won’t catch a cold when China sneezes — and it will only be a sneeze.” Yes, a real housing market crash would be potentially catastrophic for China and the rest of the world, but that’s assuming the authorities will twiddle their thumbs as the economy collapses and that systemic failure is more probable than sustainable, predetermined solutions.

No china econ collapse – data shows improvement and their impacts are over-hyped

FRANGOS 4-13 [Alex Frangos is Asia Editor for Heard on the Street, The Wall Street Journal's financial market analysis and commentary column. “China Economy: Trade Plunge Won’t Reach Great Depths”, WSJ, 4-13-15, http://www.wsj.com/articles/china-economy-trade-plunge-wont-reach-great-depths-1428908831, msm]

Inspect China’s appalling trade data closely, and a crumbling of economic growth is tough to find.¶ Exports unexpectedly plunged 15% in March compared with a year earlier and imports were down 13%. Betting on a hard landing in China increased on the news, with the Australian dollar, a proxy for China’s growth, falling sharply.¶ Yet this month’s trade data is probably not a sign of the apocalypse. China’s monthly trade figures are notoriously volatile, exacerbated by the rush of orders surrounding the Lunar New Year holiday, which changes dates every year. And on the import side, giant state-owned buyers of raw materials dip in and out of markets.¶ Looking more broadly, the news isn’t so dreary. Take the first three months of the year together, and exports actually grew 5% on-year. That may sound slow, but in the first quarter last year exports shrank 3%, and that quarter the economy still eked out a 7.4% year-over-year growth rate.¶ Some of last year’s decline in exports was due to a crackdown on money smuggling through inflated trade invoices, but that just underscores how unreliable the figures are.¶ ENLARGE¶ Weakness of imports is often pointed to as a sign of slowing domestic demand, as construction projects that require raw materials tail off. That is definitely a factor with real estate hurting. But the collapse in commodities prices means that the headline trade figures overstate the situation.¶ All things being equal, most of the drop in imports in the first quarter can be attributed to lower prices for just two line items: oil and iron ore. By value, China’s first-quarter imports of these two were down $63 billion from a year earlier. But in volume terms, China imported more of both—albeit at a slower growth rate than in the go-go past.¶ Alternative indicators, meanwhile, hardly show a collapse in trade. Container throughput at China’s ports rose 7.4% in first quarter compared with a year earlier, according to Citigroup.¶ China’s economy is undoubtedly slowing. And first quarter GDP data reported later this week will confirm that. The debate among China investors, however, is over whether there’s a controlled glide or an imminent collapse. The trade figures, for now, point to the less dramatic outcome.

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