Last week, I enjoyed a city break in Istanbul with my teenage daughter. It was made even better by the fact that we were upgraded to a €1,000 room for only €250 — in large part because our hotel, which expected to be booked solid by wealthy Chinese holidaymakers, was nearly empty.
Everywhere around the city, merchants displaying “Happy Chinese New Year” signs were even more aggressive than usual in hawking their wares to passing tourists. There weren’t many of us. “It’s coronavirus,” said the concierge. “Last year around this time, we were packed. This year, nothing.”
We might be about to see something new: a global slowdown led by China, rather than the US. The past four global recessions have been triggered by American consumers. But China’s place in the global economy has grown dramatically over that time. China today accounts for about one-third of global growth, a larger share than the US, Europe and Japan combined.
While there is no doubt that growth has slowed in recent years, the base from which China is growing has exponentially increased. As China bull Andy Rothman, an investment strategist with Matthews Asia, notes, while gross domestic product growth was at 9.4 per cent a decade ago, the base for last year’s 6.1 per cent growth was 188 per cent larger than 10 years ago. It means that what Chinese consumers and workers do today matters a lot more than it once did. “Chinese consumers drove global economic growth in 2019,” says Mr Rothman, just as they did for several years previously.