CHINA'S CHANGINGECONOMY

With the global economy becoming increasinglymore interconnected through the symbiotic use oftechnology and travel, the art of conductingbusiness has also changed drastically. Although it’sno surprise that China is now a major player in theinternational market from investors financialinterest in the film industry to most of themanufacturing of goods taking place in the Chinesemarket, the question of how much economic growthis still to be determined.

Furthermore, while the Chinese economy isexpected to grow around 7% in the upcomingyear from hard statistics provided by China’National Bureau of Statistics, there is a sharpdecline as to how the market developed inrecent years. With a recent history of masscommercial expansion in major cities acrossthe country along with the Chinesegovernment’s policies declaring itself as asolid, foundational goods based economy, thismay seem as a surprise to many.

Recently speaking, there is no doubt that Chinahas shown declining growth in terms of buyingpower with their currency losing traction to theAmerican dollar. With the years of the intensereal-estate boom of construction expanding theChinese market, the world's second-largesteconomy is slowing down a bit in terms of fast-paced, exponential financial growth in theprivate sector.

A new strategy has emerged with theChinese government implementingvarious macro and micro-level policiesthat will gear consumers and investorsalike toward the services portion of theprivate sector that will emphasizeconsumption rather than production.

Hong Kong's skyline

Some economists doubt the validity of thefinance-based statistics given by Chinesegovernment believing that they may be skewedin order to further entice both domestic andforeign investors to trust the stability of theglobal power’s economy. Julian Evans-Pritchard of Capital Economics has come to theevidentiary conclusion that China’s economywill be closer to around 4.5% instead of 7%,showing the signs of a more established,developed nation.

With this notion in mind, a major concern is whetheror not the facts and statistics generated by Chinesegovernment bodies can be trusted with such a hugenumerical discrepancy between them and theeconomic data provided by privately endorsedentities. The question of data-driven partiality is aserious enough for many domestic investors inChina to move their finances to other developednations such as the U.S. or Canada.

China's currency, the yuan

"China's ability to continue to post such rapid andrelatively stable growth, even as it has increasinglybecome a source of volatility in global equity andcommodity markets, will undoubtedly attract a greatdeal of skepticism,” Evans-Pritchard stated.

As China’s economy gradually changes to one focusedmore on services than goods, it’s not certain what wecan expect from this market in terms of financialgrowth.