Chinese leaders can ride the summer tide at Beidaihe summit
Steven Keithley says China's positive outcome in the Iranian nuclear agreement and the relative health of its economy give officials meeting in Beidaihe every reason to be in a good mood
As China's leaders adjourn to Beidaihe, "retreat" might seem a more appropriate word. After all, the Shanghai Composite Index fell by 200 basis points last month, and last week saw its biggest one-day decline in eight years. News outlets declared that the biggest bubble of this millennium had burst, and that China's economic boom was over.
Yet, in the global context this summer, China may emerge the geopolitical and even economic victor.
Although chaos lingers, compared to Greece - this summer's leading economic morass - Beijing's interventions to fix rates, suspend initial public offerings and prohibit short-selling - which sent Shanghai on a rally back above 4,000 points - have cut a contrast demonstrative of resilience and strength. Nothing indicates that similarly successful actions will not be taken to mend last week's decline.
Further, what commentators fail to comprehend is the minor role markets play, constituting just one-third of China's gross domestic product. Elsewhere, China's economy is dominant as ever, with a state-run corporation announcing a US$23 billion bid for Micron, and multinationals recognising the solidity of China's long-term fundamentals in increasingly important industries, such as financial technology.
While journalists dwell on market-related pessimism, they neglect to consider the impact of this summer's biggest story - the Iranian nuclear framework, a deal from which Beijing may be the sole unequivocal benefactor.
China's economic woes are overstated, and it has emerged from this decade's most important geopolitical agreement as the only party unscathed
The primary benefit is obvious. The deal secured the free flow of oil China had been working towards, and betting upon, for years. Not only does China no longer need to limit imports (as in 2012-13), but Beijing can proceed with the "Peace Pipeline" project to connect Iranian gas fields to Pakistan's distribution network and feed into the US$45.6 billion Pakistan-China economic corridor announced in November. Considering oil imports from Iran broke records in June without that infrastructure, the potential for the world's second-largest oil consumer seems immeasurable.