Data released this week showed China's economy growing strongly, with GDP up 4.5 per cent in September and 4.6 per cent for the first nine months of the year, on track to meet Beijing's target of 4.5 to 5 per cent growth. But Bartholomeusz argued the figures masked widening imbalances.
Exports rose 36 per cent in September, their fastest pace in more than a decade and a half, generating a trade surplus of $US938 billion ($1.34 trillion) and putting China on track to beat last year's record surplus of $US1.2 trillion. Retail sales, by contrast, rose just 1.1 per cent in September compared with the same month last year, with domestic demand near stagnant since the collapse of the property market that followed President Xi Jinping's "three red lines" policy.
The EU, by far the biggest market open to China, is running out of tolerance, the column said. Chinese imports to Europe are running 36 per cent higher this year than last, at more than €1 billion ($1.6 billion) worth of goods a day. This month Beijing agreed to cap exports of Chinese hybrid vehicles at roughly half their current levels, and France and Germany are spearheading a proposal to give the European Commission a so-called "kill switch" that could completely cut off a country's access to the European market.
Bartholomeusz noted that China's export growth increasingly depends on high-tech goods and semiconductors, which now account for roughly a third of its export growth, tying the country's fortunes to the US-centric AI boom. He said China had done little to rebalance toward domestic consumption beyond modest mortgage rate cuts and trade-in subsidies. Property investment continued to tumble, down 20.6 per cent in the first nine months of the year, even as prices have fallen about 40 per cent since the red lines policy was introduced.
Industrial production rose 5.5 per cent in September, including a 14 per cent increase in high-tech manufacturing output, a bright spot that the columnist said also highlighted how China continues to produce well above its consumers' capacity to buy. The gap between flat-lining domestic consumption and surging exports, he wrote, is blowing out and swelling the imbalances within China's economy.