It’s easy to see why the US, Japan, and Europe are particularly concerned when it comes to the shift in world power towards China. It looks like the era of Western manufactured goods is going to come to an end in a flash, and CIC has emerged as the world’s largest market for electric vehicles. In 2023, China produced 6 million cars, which is 6 times more than what they produced in 2020, And some sources claim they can double or even triple that. Chinese solar panels make their way to Europe, and battery electric vehicles have already captured almost 30 percent of the E.U. market.
In volume terms, China’s exports increased by about 13 percent last, which was about 4 times the rate of growth in world trade, and its imports have hardly kept pace. The trade surplus reached approximately one trillion dollars last year. “As Secretary of State Antony Blinken asserted while in Beijing last year,” China accounts for one-third of the world’s output but one-tenth of the world’s consumption, and this is an obvious imbalance.”
The explanations are simple and uncontroversial: China’s economy is still being battered by the burst of the housing bubble which aggravates the construction industry. To assist in recovering from this hole, the country’s leaders have decided to keep trying hard with exports. What should other countries do — the ones that are already suffering from the deluge of Chinese goods and now have to deal with pressure — in the face of this?
It is worth noting that Beijing’s export strategy is counterproductive; very few economists support it. A more effective solution to the problems is to boost the lackluster economy by fostering consumer spending. In China, private consumption represents less than 40 percent of the gross domestic product, while in the United States, the amount is 69 percent.
Wary of an underdeveloped safety net, the Chinese strive to save money for the future, contributing to an expenditure level that is amongst the highest in the world.
Xu Gao, the chief economist of Bank of China International, criticized the Chinese people for causing a demand deficit cycle, stating that their lack of spending has made it impossible to get effective demand. He further added that this problem is persistent and has worsened further after considering the recent economy.
China’s leadership has a different intent and aim altogether. They do not want to lose grip or control over their global supply chain, which in turn allows them to keep boosting the economy by increasing their capital investments, focusing specifically on industries they deem necessary. Because of this, China is now reliant on exports to be able to boost its overall economic growth.
The US, Canada, Mexico, and the European Union have raised concerns regarding the growing imports from China. Along with other items, high taxes were placed on electric vehicles coming into the country, making it unnecessarily difficult for them to enter. China’s economic goals of expansion pose a threat to imports and, in return, affect the overall economy. In response to the problems, great tariffs have been set up to try and resolve them.
Although this particular industrial policy can be construed as a beggar-thy-neighbor policy, counteractions can escalate into a never-ending trade war with far-reaching repercussions on the global market. Therefore, there is also a possibility to sustain China with a series of such policies targeting China. The entire Chinese manufacturing sector is projected to account for 45% of global manufacturing by 2030. With President-elect Donald Trump set to assume office with a new wave of tariffs aimed at China, it is prudent that American officials bear this in mind when waging an all-out trade war against such an economy. China has positioned itself as a leader in the global economy by becoming the central figure in all global supply chains.
Throughout his presidency, Donald Trump made it his mission to punish China, which Joe Biden was keen to further with the hopes of quelling fears stirred by the increased military rivalry, further complicating the entire situation – the goal was to identify the military purpose of China’s rise and thwart it. Unfortunately, a differentiation between the trade deficit and the decline of American manufacturing caused a mix-up.
This line of thought attached to US policy likely prompts us to forget to mention the areas that require cooperation with China, such as mitigating climate SDG and the dire implications that the United States along China are set to bear due to disentangling economies with each other. In this case, it also oversimplifies the interaction patterns that exist on the international stage.
The considerable worry of the president-elect regarding the US Trade deficit with China and the rest of the world is, in part, a result of why he has such trade imbalance issues. The United States is largely responsible for the concern at hand, more particularly its gross imbalance and even lower percent saving levels. Certainly yes, China’s currency is priced too low in the international sphere. However, the American dollar today once again is overpriced because of Washington’s loose fiscal policy combined with a stringent monetary policy mix.
There certainly is, as many and countries such as the United States, European Union, Japan, Mexico, Indonesia are worried about an uncontrollable tide of Chinese exports and so taking protective measures against that event. However, being careless about “stopping China” from producing, exporting, and earning money is sure to be a dangerous thing.
The Written Existence’s Prompt focuses again and suggests that uniting to defend an interlaced world economy should be the priority amidst the rising tensions between two of the world’s largest economies, the US and China, who have been hostile for the better part of the decade. As the plane heads toward a global economic crisis, how China poses a threat to American national security and its global influence seems to be the discourse. However, vetoing tariffs on China is hardly going to resolve tense relations with China going forward. However, the potential for conflict with China would appear to be a greater determent to the survival challenges facing the world. Not to mention, the potential conflict would also harm the global market.
