Some time over the next few weeks – the exact time depends on which sheaf of official figures you choose to believe – China will probably overtake Japan to become the world’s second biggest economy.
The switch will be a noisy moment for economists: there will be excitement and alarm in equal measure. But the most important change has already taken place: the world at large has started caring about what were once obscure Chinese statistics.
That is what happens when countries become truly important: the daily disgorgement of official figures which previously seemed so tedious and irrelevant suddenly seems momentous and illustrative. And seldom has that transformation happened more quickly than with China at the turn of the new decade.
The numbers are now pounced on as evidence for every theory out there. If, like the authors of the World Economic Forum’s new Global Risks report, you believe that a sharp Chinese slowdown is one of the biggest risks to global economic growth, inflationary garlic prices and potentially excessive investment in factory capacity might be your numerical weapons of choice. If, like HSBC, you believe that China now represents the emerging global centre of gravity, you might prefer the monthly chart of Shenzhen house prices.
And the numbers are fast becoming points of mainstream interest. Outside academia and the financial markets who, two years ago, would have cared much about the year-on-year pace of monthly M2 money supply growth in China? In 2010, it cannot be ignored. It has joined a swelling list of Chinese numbers that have begun to shape global politics. For the record, aggregate new lending in China last year was RMB9.6 trillion (£860 billion) – almost twice what it was in 2008.
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The banks of China have doubled the amount of money in the system in 12 months. That has never happened before in a major economy that was not at war. The volume of the cash itself is also unprecedented. That amount of money will cause disruption and the effects will be global. No one – including the Chinese government – knows exactly how and where the disruption will emerge, however, which only adds to the need for worldwide scrutiny of numbers we never used to care about.
The trick, say seasoned economists, is to look for the delinquents: the numbers that start misbehaving. A fine example emerged yesterday, when China’s General Administration of Customs published its monthly reckoning of refined oil products. In December, for the first time in history, exports were greater than imports.
Those on the lookout for signs that China has dangerously overinvested in capacity might leap to dark conclusions: something has probably gone wrong if a country whose energy consumption is rising by the day is suddenly refining more oil than it needs or can store. That may indeed be the case, and China’s emergence as a refined oil product exporter is monstrously bad news for refiners in Japan and Singapore.
But those with an eye for geopolitics may be even more nervous. China’s energy planners are playing the long game of energy independence. That is why they are so keen to secure oil and gas fields around the world.
Domestically, the strategy is to build by the year 2020 100 per cent “refinery cover” – the ability to do all necessary refining on home soil. That rare ability would provide an astonishing level of independence. Yesterday’s export/import figures prove that the plans are further advanced than anyone realised.