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Writer's pictureNishant Mittal

Are China's economic troubles real?

It's amazing how China, even in its perceived moment of economic fragility, is sitting at a yearly trade surplus of 1 Trillion dollars.


One trillion dollars. That's just the trade surplus. China's total exports in 2024 are expected to be about $3.6 Trillion. That's almost as much as India's GDP expectation of $3.8 Trillion. In comparison, Indian exports were at around $778 Billion in 2023, with a net deficit of about $100 Billion.


Thankfully, India gets about $100 Billion in remittances. Balancing things.


In 2023, China's GDP stood at $17.89 Trillion, to grow at 4.9%. Basically adding about $900 in GDP. In contrast, India's GDP stood at about $3.5 Trillion, expected to grow at 7.6%. Which translates to an addition of about $270 Billion in GDP.


Even while being over five times larger than India, China's growth rate doesn't look that bad. For an easier (and perhaps closer) comparison, one can even look at US - an economy of $27.3 Trillion, expected to grow at about 2.5% in 2024.


Please say China's debt spells danger. And also its real estate market troubles can lead to "contagion risks" that can wreck the entire economy. But really?


China's total debt is estimated to be a little over $14 Trillion, out of which over $12.5 Trillion is local government debt, which can be rolled over and refinanced at will. Leaving only about $2.4 Trillion in gross external debt.


Okay.


But quite quite interestingly, China is sitting at a Forex reserve of over $3.3 Trillion. Largest in the world. So what then?


Back in 2004, economists like Paul Krugman started sounding off an alarm on the Chinese economy, stating that its over leveraged and can fall down like a house of cards. It's been 20 years, and the country is raking in over a trillion dollars in export surplus.


Well, of course, back then people didn't know or realise that "Nobel Laureates" like Paul Krugman are nothing but absolutely clueless bullsheetters, and that it makes perfect sense to always do the exact opposite of whatever they say (the guy was betting against Internet). But now it's clear. Everybody knows the brains in such "Nobel Prize winning economists". How are their views still relevant?


I believe it'll get tougher for China in the next fours years, thanks to Troomp. And I hope it does! But unfortunately, the leverage that they have gained since 1980s (and then Bill Clinton bringing them in WTO in November 1999) is too much of a hurdle to cross now.


No matter what the critics say, China seems here to stay. Sadly to make every country's lives difficult with its dominant, expansionist and even exploitative foreign policy. But of course, we (countries like India) can hope for a miracle...


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