1. China’s economy
Over the past half-century, China’s economy has transformed from a struggling emerging market to a global powerhouse. But its high-speed growth rate exceeded the pace of institutional development and there are still important gaps that need to be addressed.
Those gaps include facilitating domestic consumption and lower savings, reducing debt levels, reforming the SOE sector and realising a balanced and healthy rise in prosperity with growing living standards for all.
For all the giddy talk about China’s booming high-tech sectors, its economy is still driven by the primary and secondary sectors: manufacturing, industry, and construction. As the IMF recently pointed out, it’s these three industries that are responsible for a far greater share of China’s GDP than high-tech or even nonproductive investment.
2. China’s trade
China is a significant player in global trade. It is the world’s largest exporter and importer of goods, and its share of global trade has increased rapidly over the past decade.
Despite its rapid growth, China’s economy has a number of significant challenges that can undermine its success. These include rising labour costs, growing domestic demand, and a maturing service sector that has a lower proportion of GDP than more developed economies.
This has prompted Beijing to increasingly focus on developing its own domestic value chains and investing in technology, which is critical to China’s future economic growth. The country’s trade is also highly concentrated geographically, primarily in resource-exporting sectors and those that have globally integrated technology chains.
Although Chinese imports are much larger than exports, they only account for a small percentage of total trade. In terms of goods, China’s main export destinations are Hong Kong, Japan, the EU countries, and South Korea. In services, the US and Hong Kong are major trade partners.
3. China’s investment
China has made a large investment in boosting infrastructure development, particularly in developing countries. Through its Belt and Road Initiative, China plans to develop a vast network of railways, highways and energy pipelines across the world.
This is important because meeting the Sustainable Development Goals will require an average of 3 per cent more global infrastructure spending each year over the next three decades. This will require a massive increase in the amount of financing available for such projects, including infrastructure investments from China.
Moreover, China has also financed many high-tech firms in the United States. These include companies that manufacture products such as solar panels or medical devices, but also technology firms that use software to automate production processes.
While Chinese investment has been beneficial to the US economy, it should be subject to more restrictions, especially in sensitive sectors, to protect American national and economic security. Among other things, the United States should not allow Chinese companies to buy advanced technology or access personal data. It should also bar companies that are involved in serious human rights violations or have been caught violating American laws.
4. China’s GDP
China’s economy is the world’s second largest, behind only the United States. But it’s a far cry from the booming growth rates it enjoyed for decades.
The country’s GDP grew by more than 6 percent in every quarter of last year, but that wasn’t enough to restore the growth it was used to. The economy will rely more on state investment, high-tech development and domestic consumption as it seeks to overtake the US by 2030.
The country’s manufacturing sector remains a strong contributor to the economy, accounting for about 40 percent of GDP. It manufactures mining and ore processing, processed metals, coal, machinery, textiles and apparel, and consumer products.