CHINESE President Xi Jinping may have a spring in his step as he starts his four-day UK state tour, but the economic timing was not completely felicitous as it coincided with data showing that the China economy limped to its lowest growth in six years in the latest trading quarter. Everything is relative, of course. A growth of 6.9 per cent in the three months to from July to September would have most other countries doing somersaults if they achieved it.
But, coming down from 7 per cent in the previous three months, the performance, taken in line with the boisterous summer the Chinese economy, currency and stock market have had, was bound to take a little lustre off the occasion of Xi Jinping’s visit.
The latest data predictably hit mining and oil stocks in the UK, China being a major importer of energy and commodities. The crude oil price fell 3 per cent, back down under $50 and continuing to provide a less happy backdrop to the West’s economic prospects going forward.
The positive take, and hopefully not a pious hope, will be that China has things under control and that we are at the bottom of the less good news from that country.
Market bulls point to the fact that although the country’s economy is more subdued than we have got used to in recent years, there remains underlying stability.
In the wider political/economic picture Britain is in an odd position. We do not want to be seen to be kowtowing to the Chinese, given their appalling record on human rights abuses, and for concern we do not put the nose out of joint of our traditional key ally, the United States.
But realpolitik suggests China is now, and will increasingly be, the coming economic power and Britain would be cutting off its nose to spite its face to doctrinairely take the moral high ground. But ethics and lucre will always be unsteady bedfellows.
It is a difficult issue to reconcile, and pointless to pretend otherwise. Hence, Chancellor George Osborne’s recent high-profile and glad-handing trip to China and the unsubtle blandishments that went with him to set the scene for the return match here.
The truth is that both Britain’s services and manufacturing industries need access to a pivotal emerging market like China.
The market is becoming something of a backstop for the trading fortunes of countries around the world. We cannot blithely ringfence ourselves from that need.