Asia in 2016: China
China’s easing economic growth was partly offset by robust domestic consumption
The Chinese government had much to be irritated about in 2016, both at home from its gyrating stock markets, and abroad from an unfavorable international ruling on its South China Sea expansion and attacks on its economic policy from Donald Trump, now President-elect of the United States.
The Chinese government rejected an international tribunal’s ruling in July that China has “no historical rights” to its territorial claims in the South China Sea. The judgment, by the Permanent Court of Arbitration at The Hague [PDF], came down overwhelmingly in favor of the Philippines’ claims, which increased pressure on Beijing to scale back military expansion in the area. In response, Chinese President Xi Jinping said that China’s “territorial sovereignty and marine rights” in the sea would not be affected by the ruling, which declared large areas of the sea to be neutral international waters or the exclusive economic zones of other countries.
China’s currency tumbled in November 2016 to its lowest level in nearly eight years after the presidential election in the United States. While U.S. President-elect Donald Trump blamed China for devaluing its currency to gain trade advantages, The New York Times noted that slowing Chinese economic growth and reduced inflows were largely responsible for the renminbi’s gradual decline throughout the year.
The stock market turbulence that had dominated 2015 continued into last year, prompting regulators to introduce a “circuit breaker” to curb wild fluctuations. However, the mechanism was abandoned after it was triggered on January 4 and January 7, on the latter occasion just 29 minutes into the trading day when the market fell 7 percent. Regulators were criticized for setting the level so low that it caused more panic trading from investors wanting to trade before it was tripped, creating a vicious spiral.
Although China’s gross domestic product growth slowed to 6.7 percent last year, one of the lowest increases in decades, consumer spending remained robust. On November 11, China’s Singles’ Day saw a record US$17.8 billion in online retail sales on Alibaba alone, dwarfing the Black Friday and Cyber Monday combined sales in the U.S. of US$6.17 billion. China became the world’s largest retail e-commerce market in 2013: last year’s retail sales of US$899.09 billion represented 47 percent of the global total.
Beijing closed out the year as heavy smog blanketed the capital for five days. Authorities issued the city’s first air pollution red alert on December 16. The main cause of smog in China is greenhouse gas emissions from the burning of coal for electricity and heating, which spikes when demand peaks in winter. Although China formally ratified the Paris climate change agreement in September, the country produces about 30 percent of global greenhouse gases.