Lunar New Year Sales In Line With Expectations

U.S. tariff wars have contributed to the gains of China’s domestically- manufactured models, which grew some 3.9% last year and made up more than nine of ten cars sold in January. And in the absence of tariffs, Japanese Toyota is expanding in China. Sales of the Japanese carmaker’s vehicles surged 14%, while Volkswagen held its ground.

In the 1970s and ‘80s, Japanese carmakers beat U.S. giants because the former offered smaller, more fuel-efficient and affordable models. Today, Japanese and European producers push attractive hybrid vehicles. Trump's America does not take climate change seriously; China, Japan, and Europe do.

Until spring 2018, global prospects still looked positive and expansion in the U.S. and Europe had momentum. It was the White House’s new protectionism that undermined the promising future, as evidenced by the Baltic Dry Index. It rose to almost 1,800 until July 2018. After the Trump White House began to implement its tariffs against China, the Index has plunged to less than 600 – lower than amidst the 2008 global crisis.

Consumption on track

Like their counterparts in the West, Chinese consumers are now more cost-conscious as they should be, thanks to tariff wars. But it does not follow that Chinese rebalancing toward consumption and innovation is falling.

Despite international negative hoopla, Chinese GDP growth in 2018 was broadly in line with expectations since the beginning of the year, as even World Bank has acknowledged.

Much of international media mistakes secular, long-term trends with cyclical, short-term fluctuations. So the deceleration of Chinese growth is portrayed as a secular slowdown. In reality, deceleration reflects the eclipse of the intensive phase of industrialization, which heralds a shift to post-industrial society, and deleveraging, which will make that transition more resilient.

In the early 19th century, England experienced its "growth miracle." In the late 19th century, US growth accelerated. As these countries began to move toward post-industrial services, growth acceleration gave way to deceleration. That’s the norm with industrializing economies. Similarly, a decade ago, China still enjoyed double-digit growth. But today growth is slowing relative to its past performance.

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Disclaimer: Dr. Dan Steinbock is an internationally recognized strategist of the multipolar world and the founder of Difference Group. He has served at the India, China and America Institute ...

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