Spanish Economist Daniel Lacalle, Member Of MEMRI Board Of Advisors, On China's Economy: Growth In Retail, Industrial Production, And Fixed Investment – Despite Challenges In The Real Estate Sector – Indicate An Economy Stronger Than It May Seem

On December 24, 2024, prominent Spanish economist Daniel Lacalle, who is a member of MEMRI's Board of Advisors, posted a video to his YouTube channel in which he discussed China's economy and what can be expected for it in 2025. He explained that China's retail sales are growing almost at 5%, industrial production is growing 5%, and fixed investment is growing at 3.4%. He commented: "What we can see is that the Chinese economy is much stronger than it looks and certainly much better than what we can imagine relative to, for example, the European Union." He also said that this growth is taking place in the midst of major challenges in China's real estate sector, adding: "Once you have that challenge included in estimates, the fact that the economy is growing at around 3.5 to 5% is actually a pretty good number if we look at what is going on in the Euro area, which is atrocious."

Daniel Lacalle: "Let's start with China. China has been growing massively in terms of its market share in automotive production. Not just an incredible surge in market share, but seeing this graph, what it shows is how Europe, Japan and the United States have been declining quite steadily. Japan quite stable, but in that in terms of Europe, the entire destruction of the market share in the automotive sector has come from an increase in the China market share. Now what we need to understand is what can happen in the future, because the European Union has given its future in terms of the automotive industry to China for free with its decision to abandon combustion engines and to focus entirely on electric vehicles. It has basically destroyed the automotive industry in Germany and in other European countries, and at the same time it is losing competitiveness because Chinese companies are much better in terms of technology, access to raw materials and price than the European ones. It's a very, very challenging environment.

"In this graph, what we can see is that Chinese growth is considered to be very weak. However, if we look at the details in general, they're not as bad as one would imagine. Retail sales are growing almost at 5%. The industrial production is also growing 5%, and in the case of fixed investment, growing slightly less, but at 3.4%. Therefore, what we can see is that the Chinese economy is much stronger than it looks and certainly much better than what we can imagine relative to, for example, the European Union. It's very important to understand that this is happening in the middle of a very significant challenge in the real estate sector. So once you have that challenge included in estimates, the fact that the economy is growing at around 3.5 to 5% is actually a pretty good number if we look at what is going on in the Euro area, which is atrocious."