After a week of bloodletting on Chinese stock markets, punctuated by sudden surges that looked suspiciously like government intervention, the global investor debate is about whether China is falling off a cliff or simply experiencing a slowdown.
But the consensus is that the Chinese growth party is over, which leads to a pressing question for policymakers in other countries: Does that change China’s approach to geopolitics?
“A slow-growth China would undermine the global economic recovery,” Richard N Haass, the president of American think-tank the Council on Foreign Relations, wrote last week. “It would be a less willing partner in tackling global challenges such as climate change. Most dangerous of all, a struggling China could be tempted to turn to foreign adventurism to placate a public frustrated by slower economic growth and an absence of political freedom. Nationalism could become the primary source of legitimacy for a ruling party that can no longer point to a rapidly rising standard of living.”
Days later, Chinese internet filters were set to censor searches for “Black Monday”, as the market plunge on that day was inevitably dubbed, and police started showing up at the doors of Chinese journalists reporting on the market volatility.
But if any of China’s partner countries are feeling jittery about the implications, they are carefully not showing it, least of all South Africa.
On Tuesday, China’s foreign ministry released the list of foreign dignitaries expected to attend its September 3 military parade to celebrate Japan’s surrender during World War II. Leaders of many Western powerhouses will be absent. President Jacob Zuma will be there.
Also on Tuesday, Deputy President Cyril Ramaphosa made clear the official South African outlook for the Chinese economy while talking to the Japanese National Press Club during a visit to Tokyo.
“The Chinese economy slowdown is a concern for all economies in the world and no doubt it has an impact and will have an impact on the South African economy,” Ramaphosa said, according to an official transcript.
“Economic activity goes through slumps and they go up again, and we have confidence in the resurgence of the Chinese economy. We have great confidence in the Chinese government’s ability to manage that economy, to manage it back to growth and back to life. Like we have confidence in our own government’s ability to manage our country’s economy to go on the up again, so economic activity is cyclical – it goes up and down – but right now we are confident we will keep steady, we will manage the slump down as we move on to higher levels of growth.”
As Ramaphosa was speaking, the consensus was that the second quarter of the year would show a small increase in South African gross domestic product (GDP). When the numbers were released the following day, however, they showed a 1.3% contraction in the economy, renewing talk about the possibility of recession.
Forecasts for China still show healthy GDP growth: 6.8% this year and 6.4% in 2016. But Ramaphosa may have also been wrong about a resurgence in the Chinese economy. China is slowing, forecasters agree, and the myth of its economic exceptionalism may finally have been shattered.