Slowing down of China’s economic growth engine

China is projected to focus this year on multilateral partnerships and its own hi-tech
advancement for sustainable economic growth, despite being engulfed in trade negotiations
with key allies. While the GDP growth is expected to be 5.1% in 2022, according to the
World Bank, one of the weakest rates in the past half-century for a nation that has
traditionally relied on exports from its enormous factory facilities.
A four-year trade war with the United States has resulted in a total loss of US$550 billion in
import tariffs, the majority of which are aimed at Beijing. According to Jayant Menon, a
visiting senior scholar of the ISEAS-Yusof Ishak Institute’s Regional Economic Studies
Programme in Singapore, the chasm is doubtful to be bridged this year he said, he further
went to add, “China’s trade policy with respect to the United States has been more reactionary
than anything else – responding to, rather than initiating, changes on a tit-for-tat basis,”
The World Bank predicts a significant slowdown in the global economy and has lowered its
predictions for the United States and China. Due to the ongoing political tensions between the
two nations, Chinese exporters have stopped importing Australian coal, sugar, barley,
lobsters, wine, copper, and log lumber since 2020.
Last year, Japan filed a formal complaint with the World Trade Organization over antidumping charges imposed by China on stainless steel imports since July 2019, prompting
Beijing to express “regret.”
In the following year China’s exports to Australia, Japan, and the United States were worth
$648.7 billion. The year before, Beijing formally entered the Regional Comprehensive
Economic Partnership (RCEP), the world’s largest free-trade agreement, preceded by a push
for a spot in the Pacific Rim’s 11-nation Comprehensive Progressive Trans-Pacific
Partnership. All of the nations involved in RCEP are free of tariff barriers as a result of the
agreements.
“The RCEP will strongly offset the impact of raging protectionism and unilateralism,
bringing free trade and multilateral cooperation back to the fore,” The RCEP, according to
China’s official Xinhua News Agency, has power to heal, was statement issued by them last
month.
As per Carla Freeman, a China expert at the US Institute of Peace, joining the Pacific Rim
deal will “increase Beijing’s relative regional influence and prompt more calls for the Biden
Administration to also join the pact”
China’s participation in the RCEP will increase its exposure to nations in South and Southeast
Asia, where natural resources, textiles, and consumer electronics such as cellular telephones
are already heavily reliant on China. In 2010, Beijing signed a different free-trade
arrangement with the Association of Southeast Asian Nations, which comprises of ten
countries.
China is currently negotiating a deal with the Gulf Cooperation Council’s five members, as
well as one with Japan and South Korea, which might reduce stop-and-go animosity between
the two countries.
Hi-tech, which has been particularly hampered by Sino-US tensions since 2018, appears to be
leaning more heavily on domestic suppliers. The US Department of Commerce, for instance,
added 38 Huawei affiliates to a list of firms forbidden from doing commerce with any
organisation in the US in 2019 and added them to a list of companies prohibited from doing
business with any organisation in the United States the subsequent year. National security
concerns were stated by the US administration.
By 2025, Beijing plans to invest US$1.4 trillion in technology to improve artificial
intelligence and wireless infrastructure. Most of the money will go to Shenzhen, the southern
tech region that has already been called “China’s Silicon Valley” since it is host to networking
equipment titan Huawei and internet behemoth Tencent.
The government’s five-year proposal via 2025 has seven tech-related goals, along with the
advancement of semiconductors. While S&P Global Market Intelligence in March 2021
noted that China’s main strategy would focuses on making technology self-sufficient while
still attracting foreign capital.
“In both software and hardware, we’ve seen China’s tech industry become much more
sophisticated. And with tech self-reliance as part of the country’s five-year plan, we should
see an entirely different tech landscape in China by 2030,” said Zennon Kapron, the founder
and head of Shanghai-based financial sector research company Kapronasia. According to
him, China was once renowned for imitating technological goods and services from other
markets rather than building its own, but that is fast changing.
The National People’s Congress in Beijing next month may examine trade, exposing any new
policy initiatives. Li Xingqian, the Ministry of Commerce’s director-general of international
trade, said during a media briefing on January 25 that 2022 is a year to “integrate and
progress.”
To provide it, China would regulate credit availability in international commerce, assist
businesses in overcoming challenges and make greater use of free-trade agreements that have
been negotiated or signed, according to Li. He mentioned that industrial parks and special
trade zones will be given more attention, as well as the creation of a streamlined movement
of commodities and resources. As per Li’ this year’s foreign trade condition is bleak, with
great challenges and stress to sustain steady development.
China has been denied inclusion in the Pacific Rim trade treaty, which includes Japan and
Australia as important members. However, Chinese consumers desire American produce,
while their businesses may require “intermediate commodities” for manufacturing, according
to Song Seng Wun, a Singapore-based economist with Malaysian bank CIMB’s private
banking division.
Alan Chong, an assistant professor at Singapore’s S. Rajaratnam School of International
Studies, Beijing emphasises that China will remain dependent on the US for innovation
because much of its IT currently is focused on manufacturing instead of innovation. Analysts
claim China must maintain one-on-one relationships with its key trading partners while
decreasing reliance.