Even the Guy Down the Pub Wants to Know What's Doing in China

  • Google search data shows surging interest in China's economy
  • China policy making process now seen as more complex

When veteran China watcher Shaun Breslin first moved to Beijing in 1984 for university, his friends thought he was mad.

China remained closeted from the outside world and was far from the $10 trillion economic powerhouse of today. The world’s gaze was instead fixed on Japan’s ascension and the tensions between the Soviet Union and the U.S.

Now, as turmoil on China’s markets ripples beyond its borders and some analysts say the country could be the source for the next global recession, U.K. based Breslin is fielding a surge in requests to explain how the world’s second-biggest economy works.

“The Chinese economy has become an issue that most people now think in some ways relates to them, and is no longer just an international news issue for those interested in international affairs,” said Breslin, a professor of politics at Warwick University and an associate at Chatham House, a London-based international policy institution. “Even somebody in the pub collared me and asked what was happening when the stock market was in its big dive downwards.”

China’s economic slowdown was on display Sunday, as industrial output and investment data missed economists’ estimates. Factory output rose 6.1 percent in August from a year earlier, while fixed-asset investment climbed 10.9 percent in the first eight months -- the slowest pace since 2000.

Breslin isn’t alone in noticing an pick-up in queries. Search interest for terms related to the Shanghai Composite index of stocks from May through August were more than ten times the level for the period from January 2011 to May 2015, according to data supplied by Google Inc.

That spike came as the Shanghai Composite Index tumbled more than 40 percent from its June high to erase $5 trillion in value from mainland bourses and triggering unprecedented government intervention to shore up stocks.

China’s currency is also garnering global interest. Google searches for terms related to the renminbi, also known as the yuan, from May through August were up 48 percent from the average level recorded from January 2011 to May 2015. Over the same period, searches for terms related to the People’s Bank of China were up 51 percent.

Authorities shocked traders with a sudden move on Aug. 11 to change the yuan’s exchange-rate regime and allow markets a bigger say in setting its value. The decision triggered the yuan’s worst losses in two decades and roiled currencies around the world as investors feared the start of a new round of competitive devaluations by governments to help their exporters.

“The China story has gone mainstream,” said Patrick Chovanec, chief strategist at Silvercrest Asset Management Group in New York and a long time China observer who used to live in the country. “It is no longer just the typical China watchers commenting on what is taking place.”

It’s been a challenging year for China’s leadership. A boom-and-bust stock market, currency volatility and a deeper-than-anticipated growth slowdown have disrupted a planned deleveraging of the economy and transition from a heavy-industrial model toward consumption and services. Among the data released Sunday was one bright spot: retail sales climbed a better-than-forecast 10.8 percent from a year earlier.

Harder Read

“Demand for insight on China has been high for a decade, as has popular interest in general news,” said Daniel Rosen, a partner at Rhodium Group, a New York-based economic research house. “What has changed over the past two years is the difficulty of making accurate assessments of China’s economic performance.”

With such complexity, demand for deeper knowledge is only set to continue.

“There has been a significant increase in investor focus on China,” said Stephen Jen, London-based managing partner at SLJ Macro Partners LLP and a former International Monetary Fund economist. “But my sense is that the level of understanding on China is about on par with that on Greece, which we all know is not right.”