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David Mahon says the Chinese economy will recover significantly towards the end of this year, and could be a catalyst for a global recovery

David Mahon says the Chinese economy will recover significantly towards the end of this year, and could be a catalyst for a global recovery

By David Mahon*

China is returning to work more swiftly than its people or trading partners anticipated.

With an annual manufacturing output of US$4 trillion, the value of the goods China produces exceeds that of the United States, Japan and Germany combined. In the last five years, China’s net exports contributed little to its GDP growth. Driven predominantly by consumption of its own manufactured goods and services, the Chinese economy will recover significantly toward the end of this year, and could be a catalyst to a global recovery. The only caveats may be China’s trading partners’ reduced abilities to supply it with components and raw materials, or another outbreak of COVID-19 in the Autumn.

Many observers of China have long been concerned about the accuracy of its data and statistics. With the news that Wuhan tried to hide the COVID-19 epidemic in early January, international scepticism of China’s transparency increased. But since the central government took control of the crisis, the data has been as good as the imperfect processes of its collection have allowed. The disclosure that over a thousand more people died in Wuhan than had been previously reported is not a surprise to those with friends and relatives there, or to the millions of Chinese people following the early, exponential spread of the virus in that city on social media. Wuhan’s healthcare system was overwhelmed in the first month of the crisis. Many people died at home, and the identification and registration of the critically ill and dying was chaotic.

Although the government coerces and censors China’s social networking systems, platforms like WeChat have ensured vast amounts of anecdotal evidence are available to the populace. The government cannot obscure the numbers who have fallen seriously ill, and they cannot, and do not intend, to hide the dead. The Chinese Government will need to offer not only reliable public health data in the coming months, but accurate data reflecting the state of the economy.

Recovery

China’s first-quarter economic performance was predictably dire. In January and February year-on-year, retail sales fell 24%, industrial value added fell 14%, and fixed assets investment declined 25%. China posts weak numbers in the first quarter of each year due to the hiatus in the economy caused by the long Chinese Spring Festival holiday, but these declines show that this year the economy almost ground to a halt.

Patronage of restaurants is slowly increasing; migrant workers have returned in considerable numbers to factories and are also appearing on building sites in coastal cities. A significant minority of migrant workers, whose coastal employers closed their businesses, simply stayed back in their villages and are working locally. As more generations settle permanently in cities, this local refuge for migrant workers in times of economic difficulty will diminish, but it will help keep unemployment figures down this year.

Students are returning to their schools but numbers vary from province to province and city to city. Travel between cities has begun to recover, but people are still reluctant to sit with others on aircraft, or in bullet train cabins. Full economic recovery will be difficult as long as people cannot travel more freely.

Some in the Chinese Government have reacted to America’s suggestions that the coronavirus had ‘escaped’ from a biological weapons or viral research facility by making the similarly ill-founded claim that COVID-19 started in the US. While the outbreak in Wuhan’s animal market seems to be the main impulse for the rapid spread of COVID-19 in China, its specific source is still uncertain. Research by Cambridge University geneticist Dr Peter Forster suggests that the virus possibly transferred to humans in 2019, and further south than Wuhan.

It is too early to conclude who acted wisely, have been negligent, or overacted around the world. There is not yet enough data, and the demographic, economic, and climatic factors vary considerably. Comparisons based on the performance of national health systems and competitive mortality rates in this crisis are motivated by a nationalistic desire to deflect criticism or ascribe blame, and will only impede the development of treatments and shared economic recovery.

Qualified recovery

The Chinese economy will pass through a deep, narrow trough, but need not enter a sustained recession. If the government can avoid overstimulating the economy in an attempt to generate a face-saving GDP growth rate, and instead continue supporting SMEs in key sectors, while reducing the influence of state-owned and private monopolies, it may use this crisis to correct existing market imbalances.

In late February, China looked as though it may lose 0.5% to 1% of is forecasted 2020 GDP growth of 6%. On reflection, this was a poor prediction. The government shut the economy down so abruptly that even with the prudent stimulus of key sectors, China is unlikely to recover swiftly enough to generate more than 2% or 3% GDP growth in 2020.

The Chinese Government has the fiscal and financial means to weather the downturn better than many countries. Chinese households save 35% of their disposable income (compared to US households’ 7%), household debt-to-GDP is 54% (compared to 75% in the US), and household bank deposits are equivalent to roughly 80% of GDP . Chinese banks have been deleveraging for three years and interest rates are higher than those in most Western economies, so Beijing can lower lending rates and loosen credit.

The banks must be bold in lending to the private sector in particular, and the government needs to lower the administrative costs and social levies on private companies. Small and medium sized enterprises are the dynamos of China’s economic growth and foundation of employment, as they may be in the global economic recovery. The fundamentals of the Chinese economy are strong enough that it may well return to healthy growth in excess of 6% in 2021.

As Chinese consumers pay increased attention to strengthening their immune systems, demand for all varieties of fresh food will be strong this year, as it will for health supplements, for which China is the world’s largest market. The ongoing effects of African Swine Flu have already resulted in increases in meat, particularly pork, imports. COVID-19 is accelerating a decades-long trend of China’s dependence on the rest of the world for food and many other resources.

Despite Western politicians predicting that China will lose markets as multinationals seek to reduce their dependence on China, commercial realities will prevail. Investors will avoid incurring costs during a global downturn and manufacture in the world’s most cost effective and efficient regions. China will be more important than ever to the global economy after this crisis.

An era of fragmentation

It is clear that most regions of the world will go into recession this year, but the length and depth of these downturns will depend upon the degrees of unity or disunity among major economies. Governments need to support employment and productivity without dampening entrepreneurialism, and manage the difficult, age-old balance between state funded stimulus and vital market forces.

There is no need relive the Great Depression. Developing countries will suffer gravely, if not from the virus then certainly from the economic fallout, but they will suffer less if the West can put aside the protectionist trends of the last decade and work toward a new global trade consensus. It will need a greater shock than COVID-19 to bring about meaningful unity in the West.

Most global institutions have not only failed to show leadership, but their member states have reacted fearfully and selfishly. The United Nations and the World Health Organisation are only as principled and effective as their constituent nations, and they are underfunded and weak. The United States has demonstrated that it is no longer the global arbiter it once was, but more a powerful and negative disruptor. The European Union is fragmented, and Brussels is a cockpit of recrimination and nationalism. China has considerable global influence, but it is not the global leader of this era. It may become one in time, but it is presently absorbed in managing the needs of its population, one-fifth of the world’s total.

Only individuals and communities can bring about real change, and the current shock provides them with opportunity to motivate their political leaders to fund public health adequately, pay health workers properly, and value and support those providing ‘essential services,’ such as in sanitation, police, education, key trades and the harvesting and distribution of food. This is crucial in the West, but also in China, where healthcare workers, teachers and police are paid poorly for their labours.

Irrespective of a weaker or stronger global economy, China will be a patchwork of marginal growth and recession in the coming months, before coming back to a fuller economic life later this year and into 2021. How sustainable this will be depends much on the global economy rebalancing itself.


*David Mahon is the Executive Chairman of Beijing-based Mahon China Investment Management Limited, which was founded in 1985. This article is re-posted here with permission.

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67 Comments

[ Sorry but that is a completely unacceptable comment. You cannot justify your criticism with 'evidence' from the Falun Gong cult. I agree there are various views, and we need to be open to alternatives. But there is a requirement to not troll, and to be respectful. You crossed it with that comment and link. Ed ]

Sure Falun Gong have an ax to grind. But all other media out of the PRC is controlled and curated by the largest censorship operation ever, bloggers vanished, individuals filtered or shut off, foreign reporters banished. Apparatchiks labor to hide anything that embarrasses their narrative and filtered sources carry only what PRC wants you to see - a facade. Non-compliant back channels risking their lives can reveal ugly truths, and so many leaks in the last months show how vast the 'Big Lie' out of china has been. I'm sympathetic to people with business in China being careful what they say, but I'm not fettered.

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This guys entire business is dependent on you still wanting to do business with China, so anyone taking his "advise" should be aware of this absolutely MASSIVE bias.

"Mahon China was founded in 1985 by New Zealander David Mahon and was a pioneer of private equity in the mainland. The firm managed five funds which realised high returns for investors, and successfully exited from its fifth fund at the end of 2016.

Mahon China also restructures and exits assets, be they stalled funds, stressed equity investments, or nonperforming loans to Chinese companies.

For three decades Mahon China has advised multinationals and small/medium enterprises on their China strategies. The firm’s expertise includes China’s agriculture, food & beverage, specialised manufacturing and technology, and services sectors".

http://www.mahonchina.com/

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Lobbying / Promtion for vested biased interest.

Not to forget many countries in the world are preparing themself to go after China.

Theres a lot of hidden promotion of China.
Rewi W who posts on the agricultural side at Interest for example has all his business basically dependent on China so how can we trust his views or anyone else so constrained?
Andrew Forrest from Fortescue is another. See his hijacking of Australian politics yesterday. FMG up 3.7% atm today as a reward.

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Everyone has a view. Bias can't be defined as any view you don't agree with. You yourself are revealing much in the way you comment. The position I take is that we should take note of a range of views, and respond to the evidence. Making up 'evidence' just to fit a view is real bias, as I think anyone would agree. But the debate of ideas has value so long the participants don't immediatley drop to sophomoric slanging. Commenting and debate that stays on the issues is welcome. Commenting that is nothing more than smears is not.

You may not agree but don't make it about some secret hidden conspiracy that only you can see. That is lazy debate.

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Fair enough David but I never see anyone presenting an opposite view in media. By the look of comments to this item it looks a common perception.
The evidence is that if you criticize China now they come for you. The gloves are off. How long do you think Rewi, Dave or anyone else heavily invested in China would survive figuratively or even physically if they criticized China.

Australia "gum on shoe" indeed.

There has been lots of well informed criticism in some reputable international publications. But yes, agree that we don't see much in little ole NZ.
Btw criticism of the CCP does not automatically correlate to dislike/hatred of China and it's people. I have read some very critical pieces from people who know the country very well and love it.

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This morning I read a very interesting well informed article about how Taiwan has handled the aftermath of Covid-19. Surely a highly relevent subject. I found it on a friends Facebook, from a reputable American publication. Why is Taiwan almost shunned by NZ media?

Agreed - if it is biased present challenging facts. Personnally I found plenty to agree with but would need more information to come to the conclusion that now is a good time to invest in China. But rather obviously where is a good place to invest - only Taiwan has come out of Covid-19 fairly intact and I assume their economy and exports depend on the developed world not in recession and of course no increased beligerance from the mainland..

Exactly. And being actually based in China, it would be against the whole notion of self-preservation to say anything too critical.

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Is that 2/3% growth real or made up? Anyone who pays the slightest attention to China knows that the GDP figures have been falsified for many years. McMahon's Book, China's Great Wall of Debt makes this abundantly clear.

If anyone has been paying close and deep attention to China, it has been David Mahon. Lay off the cheap drive-by slagging. If you wish to comment stick to the reasoned bits.

I'm paying very close attention to China David. I lived there for 25 years.

The article isn't balanced. Hong Kong has it's lowest level of air pollution in decades. My friends are now hiking all over the hills taking great photos. What this means is the factories in Dong Guan are idle. Friends in Shanghai and Beijing are experiencing the same.

China isnt going to be bouncing back, it's going to be using the HK post SARS playbook ~ massive infrastructure spending. But here's the thing, you cant transfer 250mm people into infrastructure projects. Why 250mm ~ Chinas working population x probable Ue rate based on a slightly higher rate than the US.

China is absolutely fkd David. The banks have been drained of capital as everyone and their dog has taken money put of the country but moreover this wave of localism is going to exacerbate every issue China is facing.

The article above doesn't touch on any of these issues. Its banging the propaganda drum.

Good insights from a rare person in NZ who has actually lived in China, thanks

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Western companies have been deserting China at a trickle for the past few years in favour of cheaper alternatives like Vietnam and Bangladesh, that trickle is about to turn into a flood.

[ Personal insults not acceptable. Final warning. Ed ]

China won't be changing habits of a lifetime.The word ACCURATE does not appear in their vocabulary.

All governments are inaccurate. Remember how NZ was well prepared for an epidemic etc. All countries put a positive gloss on every issue. China has the problem of being very poor at it. Probably caused by a 2,000 year history of autocratic rule and an inability to handle any criticism.

[ Unacceptable low quality comment. Final warning. Ed ]

I have re-read the article and it's actually reasonably balanced. While he recognizes the headwinds facing China I do think he underplays them.
I also think he underestimates the anger in the west at the CCP. Yes, it can be easy to overplay the economic implications of that. But similarly, it can be easy to underplay it. I think the author is guilty of the latter.

Anger at their handling of the pandemic? It’s true that the initial response (silencing doctors etc) was appalling, but I haven’t seen much to suggest the leaders of the big Western powers would have handled it any better. They had months of warning and still f’ed it up royally, with a few notable exceptions.

Agree. But a lot of this comes back to how China bungled it from the get go. By the time they were getting on top of it, it had already spread beyond their borders. They also failed to share info.
Also they haven't taken the whole wet market viral breeding ground seriously enough.
And to top it all off, their rhetoric has been disgraceful.
And it's kind of the final straw in terms of a whole lot of dodgy human rights and economic behaviour.

Too many deliveries of faulty medical equipment. This was not likely to be China govt policy but it will be remembered.

Its not just medical equipment, it is everything they make that is inferior. But that is what NZ is accepting by buying at the Warehouse & Bunnings etc. The price is right and that's what people go for. They might like the price point but they are not recognizing that they are in fact not getting 'value' for their money as the crap just does not last. This is planned by China and has been around as long as anyone has been studying marketing has been going on..it is called 'planned obsolescence', where a product is specifically and purposely being manufactured with inferior materials to only last a certain period of time before a consumer has to replace it.
I am guilty of it. Bought a barbecue form the Warehouse last year ( because it was friggen cheap), purportedly made out of stainless steel. Unfortunately was only 3 months old before it started rusting.....

It’s weird how, after a few years of being very blasé about increasing Chinese influence, we’ve wildly swung to paranoia. There is *plenty* that is disturbing enough about the Chinese government without having to make things up, yet wild conspiracy theories (WU FLU A CHI-COM PLOT TO DESTABILISE NATO etc) are ever more common and increasingly contradictory. I don’t like it - the made-up problems distract from the real ones.

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Well they've been quite a few of us for a few years who have been increasingly concerned.
But agreed that the majority have been blase.

Personally, I appreciate the article. With regards accuracy of numbers, show me a nation that is totally accurate, and honest. Look at nz, inflation, 2% -3%. How much have house prices gone up? What about the cost of living? Inflation comes from a carefully selected basket of items, not that difficult to get the numbers needed for the outlook required. Yet no one is fooled when they pay their weekly shopping, or power, or rates, or insurance bill's. Reading between the lines is how most people decide what actual actions they will take.
If people believe for instance, that MMT, is a sustainable way to run an economy, then fair enough. For those that don't think it's such a good approach, they'll have to be content with the prevailing outlook.
However, confidence seems to be the one commonly agreed factor. It's only when people in large numbers start losing confidence that the system is threatened with collapse. People taking cash out, storing cash etc, is an actual grassroots report, and a sign of dropping confidence. In the same manner, John Key selling his newly built apartment can be taken in a number of ways, hence the reading between the lines. "Time to exit propery market", " great investments pay healthy returns" or perhaps " yeah, living situations do change".
So a well put together article, from someone with experience in China is a valuable input.

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Evidently, based on the ed intervention, many comments have been v anti.
I will try to stick to reasoned argument therefore.
China (acc to James Rickards) produced 7 years of quarterly growth which did not vary from State targets.
This is not normal in any cycle of growth/decline for an open economy.
China has an ageing pop problem and its workforce is declining in size.
China's debt is un-calculable and its control over it and its supposed collateral, also v difficult to calculate on a risk basis.
In terms of deaths and infections, all countries are facing problems of inaccuracy and under-recording.
Bit China's death toll figures are laughable. 4000 for a 1.4 billion pop? Please...
We do not know what China did in terms of its suppression of the outbreak in wuhan and we do not know what the infection and death tolls were. However, some estimates are around 45000 for Wuhan. Which in a city of 10m, is not outlandishly off the mark, in all probability.
UK has 27,000 dead and it has recently been stated in Financial times that the real total is around 50% higher at least = 40,000. For a pop of 67m. Yes, countries are difficult to compare but pop density is a sure criteria for severity of result re virus and China is a LOT more densely pop than UK.
China is also issuing veiled threats to Australia in respect to its request for an enquiry into the source and course of the outbreak. Their Ambassador was even trying to suggest Wuhan was NOT the source. Risible.
WTO trade rules forbid currency fixing and China has fixed against dollar for many years and faced no consequences for it. You do not have to like or agree with Trump, to be able to criticise China.

Well put.

Criticise China? Doesn't need any mention of economics. Even if the China economic miracle had all its citizens out of poverty with wealth per capita equal to Taiwan or Singapore and zero debts of any kind I would still be critical of China for ill treatment of Tibetans, Falun Gong members and Uighurs. The evidence is overwhelming. All the Chinese I know are pleasant people but their govt with its control of its media makes me distinguish between the people and their government.

Do you also pose the same questions to yourself when filling your car with fuel or throw on a snazzy garment or pair of shoes sourced from similarly oppressive countries with values diametrically opposed to ours ? I loathe the CCP's modus operandi and dislike the way our tiny economy is so dominated by china but we are very lonely down here and following Ardern's mocking of Trumps hair on the John Oliver show the orange guy hasn't shown much inclination to extend a free trade hand in our direction. Our economic weakness means the survival of our way of life requires us to engage in realpolitik and swallow some dead rats from time to time.

The answer is yes. For example I had intended mentioning Saudi Arabia in my earlier comment. But first I must make it clear that although I criticise the Communist Party of China's policies I do buy plenty of Chinese products. My rejection would go so far as (a) speaking my mind (b) not taking political donations from sources tainted by the CCP (c) not attending meetings with senior Chinese govt leaders. This is not much but it is more than most of our politicians can manage. And our universities that have Confucius Institutes - Sweden has now rejected them.

Tibetans, Falun gong members and Uighers. This is enough to cause to you to be critical. So, I ask you, does the outright and open destruction of Iraq, Afghanistan, Vietnam, Venezuela, Syria, etc etc, cause you any reason to be critical? Where exactly has China openly bombed, invaded, used sanctions to bring about crippling damage, intervened at will to bring about change in govt? The treatment of Tibet, Falon gong and the Uighurs certainly deserves our attention, yet to do so without recognising what has gone on, is going on, in the other parts of the world is somewhat unreasonable.

You demonstrate why the forgotten war is aptly named. And lets pretend Cambodia is not a place. China hasn't possessed the ability to externally project military power up until now and even then it's capacity to do so is still modest.

Vietnam was rather a long time ago although I do remember attending an anti-american protest march, we chanted 'Ho Ho Ho Chi Min'. Who do you blame for Venezula? By Iraq I assume you mean the 2nd war not the first one started by the inasion of Kuwait. Syria - too many armed forces many fighting for a variety of nations. We could squabble about interpretation of events. My mentioning Tibet - that stared a long time ago. However there appears to be good evidence that Uighur cultural genocide is underway and involving maybe one or two million in concentration camps. That is now. Your comment is another 'what about' distraction. OK I wouldn't grovel to Presidents Trump or Xi - is that clear.

China has taken over Tibet and East Turkestan and colonised them with Han chinese. It has taken over the Spratley Islands and put armed forces on them having ignored international arbitration. It has even intervened in electing the mayor of Auckland via dubious political donation. Sino-Indian war of 1962.
Stick to the subject - I m proud when our govts signs international letters querying the treatment of Uighurs. I'm embarassed when our MPs meet and shake hands with Chinese officials reputely involved. Yes it is an internal matte but the injustice is so large we should protest appropriately. As we should for the Rohingya in Myanmar.

10,000 Urns delivered to Wuhan Crematoriums , death toll for country >4000 ???????????????????????????????????????? Try 120,000 + per comments from Taiwan bloggers with Wuhan rellies and delivery of 20 Mobile cremaatorium containers each with a capacity of 5000Kg a day, join the dots.

The opening line of Mahon's carefully restrained essay, that 'China is returning to work more swiftly than its people or trading partners anticipated' is salient, given it will be the most critical influencer of the speed of NZs recovery. His view is supported by our own experience where chinese suppliers continue to fulfil and ship orders with their usual impressive focus on customer service. We can validly rail about official mismanagement of the C19 outbreak and dissembling from the CCP but there's nothing new about the latter. We trade with more than a few countries where official corruption and oppression is endemic, so it can't be just CCP morality that we object to. Those advocating a Jacinda style nuclear moment pullback strategy from china should properly consider the severely negative impact on our way of life. We are about to get a taste as chinese tourism withers.

There's much more to international tourism than Chinese tourism.

Yes indeed. But they are significant ppn and the chinese centralised command economy means we are more vulnerable to its tourist traffic being leveraged against us en bloc.

Do you not think this is the 1930s all over again? Grabbing of ankles to an emerging, bullying power encroaching on all its neighbours that goes pear shaped a little later....
This time with nuclear.

The context of the Japanese 1930s/40s conflict bears only scant resemblance to the geopolitical tension scenario between china and the west today. In modern technological society human capital is where most value lies, with the exception of the few raw resources that china lacks, rendering historic concepts of territorial conquest ambitions largely redundant. Except to address historic 'restoration of national pride' aspirations eg Taiwan.

All well and good getting back to work but when your order book is empty and the customers are looking for alternative suppliers, even to the extent of paying costs for firms to manufacture elsewhere eg Japan, your optimism needs to be tinged with reality and a damned good marketing budget . I don't believe customers will forgive and forget easily with such a huge economic and human cost fresh to memory.

Heres a couple of players in Oz that dont think that way.
https://www.google.com/amp/s/www.dailymail.co.uk/news/article-8272347/am...

The evidence is there. Anyone with cash in the game with China is willing to throw their country to the dogs.

"China says Beijing has 'groomed' them to be 'megaphones' for its policy here"

No different in NZ. Spot the obvious megaphone below jumping in.

Wow. Amazing U tube graphic on Oil and China, Audaxes. That kind of explains a h. of a lot.

Thoroughly enjoyed, great graphics. Always enjoy your input.

The thesis that energy underlies economies and therefore international conflict is rational. England's coal converted it from a minor European nation to the financial powerhouse that defeated Napoleon. Ever since the British navy converted from coal to oil before WW1 oil fields have been the strategic aim of numerous wars.
However GDP per capita grows faster than energy consumption and the graph shows France using more energy than UK, Japan & Germany and two or three of those countries are wealthier per capita than France. So there are other factors even if they are minor. Nuclear energy is the great hope - then there will be little reason for all this conflict - proviso if Uranium is scarce then it had better be nuclear fusion.

V interesting thanks.
Might be useful therefore to look at drop in oil demand (30%?) since CV19 in early March, and compare to what hit expect world GDP to take?

I have read through the comments to David Mahon's article, searching for evidence from commenters as to where David M's statements are incorrect. All I am finding are assertions and statements of bias, but no-one actually critiquing the evidence he presents. I have been reading David's articles for many years. My own judgement is that if people want to understand something of China, then David M's articles should always be part of a diverse set of readings. And given that we are an export-led economy with China our largest trading partner, then we do need to hear all the evidence that we can.
KeithW

Fair enough.
So let's be specific.
The author suggests that economic growth in China could well return to more than 6% in 2021. That's similar or slightly more than it has been in the last 1-2 years.
I think that's very unlikely. A lot of unemployment has arisen in China, and I've read articles (albeit not highly scientific) that many Chinese consumers are becoming much more conservative with consumer spending. Maybe that won't last longer than this year, who knows.
Manufacturing in China by international corporations will certainly not cease. But there is a good chance a significant proportion of it will relocate. Of course, as the author says, some of it won't for purely financial reasons.
International demand for consumer products made in China will reduce significantly, and it's hard to see that rebounding an awful lot in 2021.
Of course we can't underestimate the CCP's ability and willingness to pump the domestic consumer and 'White Elephant' economies up in the coming years. But even with that, I think 2021 is a 3-4% growth story for China, not 6%.

We still shouldn't rule out some quite nasty economic repercussion from the USA and others.

Keith - I'm interested to know whether you think there should be / will be trade repercussions. Trade isn't always in a vacuum from politics and the likes of Trump have political mileage in penalising China.

I suspect you might think that the Chinese shouldn't be punished economically for covid-19 ,that it was an act of nature, that their response was not negligent... I'm not so sure about that.

Fritz,
I agree that a growth of 3% to 4% in 2020 sounds optimistic. And 2021 is indeed murky.
But I also think that China is in a much better position to come out of COVID-19 than most other countries. Even if China's GDP goes negative this year then it will be less negative than most other countries.
I also agree that China is going to face diminished demand for some of its products.
My understanding is that China has approximately $US3 trillion of foreign reserves, with much of this denominated in $US but also consderable amounts in Euros. I stand to be corrected on the specific amounts, but I am confident the resoruces are very large. It would seem to me that now is the rainy day for China to use some of those resources.
As to whether China should be punished, I have not got into that debate. What I am more interested in discussing is whether or not China will be punished and if so, what the implications of that might be. Just like with Chess, the West needs to think several moves ahead before going down that track.
I saw a comment above that factories would shift elsewhere to Vietnam and Bangladesh. I think much of the low labour garment trade has already done so, with this starting back in around 2008, as China decided that it wanted to shift up to higher value activities. Way back in 2008 I saw big garment factories in the Pearl Delta being pulled down and replaced by medium technology enterprises. More recenly they have been shifting to higher technology. I think the West will find it challenging to shift their purchases of these items in the short to medium term. As one example, most of our medical equipment comes from China and I can't see that going to Bangladesh in a hurry.
KeithW

If China manages any growth this year it will have done well. It is quibbling whether it is 6% or half that - isn't the lower figure better than NZ has managed per capita?

China's high density cities and huge factories and dorm-living migrating workers are highly susceptible to future outbreaks so they will have to keep severe curtailment of activities for foreseeable future. How can that not have a massive negative impact on GDP as it will in the west? Chinese will be self isolating and reducing spending as well. The trade impact of all the negative sentiment that China has earned through their actions. Claims of growth under such circumstances are unbelievable.

Agree with most of that, although I don’t think it will be quite as bad as you suggest.

Singapore despite all it's efforts is currently suffering a huge outbreak in migrant worker dorms. China has vastly more of those - with 10's of million of migrant workers living in densely populated dorms in big industrial centres

Homer J Simpson, describes alcohol as "...the cause and solution to all life's problems."
China is the same, apparently!

LoL,

Lucky that NZ's decision makers are equipping with more and more open mind about the world.

Lucky the biased commentators have long passed their use-by date in terms of guiding NZ's future.

I still hold very high hope of NZ for the next 30 years when the decision makers for NZ have been acting with open mind, inclusiveness, love, and empathy since their childhood.

Show me Jing Pin's open mind, inclusiveness, love and empathy. You continue to baffle.

30 years from now - maybe us old cynical Kiwis will be dead and our grandchildren will not remember the open mind, inclusiveness, love, and empathy shown by the current leadership of the CCP to Falun Gong practioners and Uighur muslims. I've read that over I million Uighurs express in Mandarin their love for President Xi and the CCP repeatedly several hundred times before they aregiven their dinner; I wonder if it is reciprocated with president Xi expressing his open minded acceptance and love of Uighurs. It is a pity their ancient culture is dying so rapidly as their graveyards are converted into car parks and mosques into restaurants.

The writer opinion is based on that 'recovery' means, .. a status before the Covid-19. More to be seen I reckon.
Why though? as about 195 countries on the planet? the world have to put all their production source into one basket? - 2021 could be interesting year of decoupling, self sufficient, trade barrier/tariff back. The old greed based model is just relying on singular source of productions to be mass consume by the rest, profit, infinite resources, sustainable are just couple of dozens new variables that will visit before end of this year. I would hope interest.co.nz is dare enough to dig evidence the past 15 years of China investment in NZ, the number of workers imported for the venture, locally recruit workers (but please, bring the ethnicity breakdown), put aside the $ value on it, dig how many of them being put into 'admin' within their short years of operations.. then stat where all the workers gone. When one was born, grew up, live & study macro/micro economics outside NZ, you started to understand China economic influence within certain ruling elites in every nations/businesses they've ventured into - another task for interest.co.nz to dig/survey/study within all those ASEAN nations economy. C'mon Ed. surely you can bring to the table the recent water bottling Co, Fisher & Paykel by Haier etc. - I was there, now let's see what number given to you to compare. Here's a link within realm of this article, (Ed I welcome you to delete it ... if it's too non-factual/evidence based).
https://tinyzonetv.to/watch-movie/watch-the-china-hustle-2018-free-59408...
https://www.interest.co.nz/news/75141/nz-likely-be-where-11-fugitives-ch...

I'll stick with not doing business with the mafia if it's all the same to you.

If you think China hasn't just taken permanent damage to demand for its exports, you are severely underestimating the breadth and depth of the anger this situation has created. "Commercial realities will prevail" - you don't get it. It's grass roots. Millions upon millions of people are going to lose businesses and be unemployed. They know exactly who is to blame. Try running a pro-China political platform in an election anywhere in the Western world in the next 5 years and see what happens.

Sadly people have always done business with the Mafia. They even helped the US army invasion of Sicily. Greed beats morality.

Fascinating, I didn't know that. Still, the point remains: holding hands over eyes and ignoring the state murder, organ harvesting, slave labour, concentration camps etc etc in exchange for a cheaper TV was all well and good while it was all happening 'over there.' The Western world just got a very visceral lesson in externalities and I think that genie won't be going back in the bottle after a month or two of everyone sitting at home watching their life plans fall apart and doing the true accounting on what that TV really cost them.

I hope David Mahon is right , but I have my doubts that we should hang our hats exclusively on China , we really need to diversify .

The Anti-China sentiment world -wide is going to be a headache for China as the rest of the world slaps tariffs on Chinese goods to protect their own economies and manufacturing sectors .

Already the EU does not allow Chinese cars to be sold there to protect German , French and Italian automakers , and the keep them out under "safety" rules and Emissions " standards .

Once China sorts these out the EU will then look at tariffs for protection and the WTO can whistle

Yes. Having 25% of your business dependent on one client is incredibly risky, especially when that client is the mafia. Small business owners intuitively understand that if you're in that position when the music stops, you're done. Only politicians and bureaucrats think it's a good idea.

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