Hyping up assumed ‘China slowdown’ harms business
One of the most influential Australian media outlets has hyped up a hypothetical “China slowdown” while highlighting the severe economic consequences it could bring to Australia. An article, published by The Australian, one of the country’s major newspapers, on Wednesday, begins with a widely circulated report by Deloitte Access Economics, which outlines a number of scenarios that are wildly hypothetical regarding China and Australia, and assesses the potential impact should any of them actually occur.
The report presents three scenarios that the author believes are plausible: a downturn in China’s economy which sends Australia into recession; Asian economies performing better than expected and the Australian government having the courage to carry out reform; and Australia getting better at being “cyber smart”.
Rather than covering all the three scenarios, the article focuses on the most controversial offering, a “China slowdown”.
The article is devoted to assessing the inner workings of the “China slowdown” scenario, ignoring any attempt to analyze the others, in what could best be described as an attempt to sensationalize an issue.
Since the article is based on hypothetical modeling rather than data-based analytical assessments, it would only dampen business confidence between the two countries.
The Deloitte modeling, says the article, indicates that “house prices (in Australia) would fall by 9 percent, stripping A$600 billion ($449.60 billion) from the wealth of families, while the share market would drop 17 percent, costing a further A$300 billion ($225 billion)”, if China’s growth fails to reach the 6.5 percent target this year and, instead, falls to less than 3 percent.
In terms of actual data and analysis, Gerard Burg, Asia economist at National Australia Bank, told Xinhua that it was highly unlikely that China wouldn’t reach its growth target, calling it a “very outside possibility”.
And Li Wei, Asia economist at the Commonwealth Bank of Australia, believes that China will exceed the growth target, reaching 6.8 percent in 2017.
“The recent growth momentum is picking up, and especially the recovery in commodity prices and industry profit will support industry growth and industrial investment going forward,” Li said.
“China’s export growth to the United States and the European Union has been strong, and will last for a while, so recovery in the export sector will also enable China to reach its growth target,” Li said, stressing that the slowdown in China’s housing market is much lower than experts anticipated, which adds to the widespread belief that the 6.5 percent growth target will be achieved, and possibly exceeded, in 2017.
In a statement obtained by Xinhua, Cindy Hook, Deloitte Australia chief executive, said the modeling used in the report is just a scenario, one of three put forward, without it being indicative of any predictive assessment.
The statement also indicated that, “none of these three scenarios is the ‘most likely’ outcome for Australia”, while the report is full of “what if ” scenarios akin to a science fiction novel about flying cars. She said it is not intended to stoke fear or harm investor confidence.
While hypothetical scenarios do serve a purpose, selective appropriation of speculative data without a full assessment of all available contexts serves only to create panic rather than promote a shared and prosperous future for both China and Australia.
Fair and balanced interaction is paramount to building an even stronger relationship between the two sides. The author is a writer with Xinhua News Agency.