China's Countermeasures Against Donald Trump's Policies
In the year 2024, China's economy continues to show resilience, driven primarily by exports and large-scale investments in new factories producing goods for export. This strategy has seen Chinese brands make significant inroads into European and Southeast Asian markets, particularly in the electric vehicle sector.
However, the economic landscape is not without its challenges. Exports to all regions, except the United States, have risen this year, but the real estate market downturn has taken a severe toll on the economy. Consumers in China are spending less, and youth unemployment remains a pressing issue.
The trade war with the United States has also had its impact. China has suspended exports of rare earth materials to the US in response to tariff increases, causing supply problems for American companies and affecting various products, including cars, drones, industrial robots, missiles, and more. China produces 80% of the world's rare earth magnets and refines nearly 100% of the critical minerals that make these magnets resistant to heat.
The US remains the most important and lucrative market for China's companies, and they risk losing clients there due to tariffs. The boycott of American soybeans by China has caused difficulties for American Midwest farmers, as China buys around 60% of the world's soybeans.
Beijing's efforts to stimulate the economy, including low interest rates, easing of real estate purchase rules, and subsidies for consumer products, may not be enough to achieve the annual economic growth target of 5%. The consumer spending and industrial production data for August were below economists' expectations, indicating a significant slowdown in the Chinese economy.
China has been investing in infrastructure in developing countries since 2013 to establish economic ties and exert influence. This strategy, part of the Belt and Road Initiative, has seen China focus on countries such as Pakistan, Kenya, Ethiopia, Malaysia, Russia, and several Central Asian and Southeast Asian nations. This investment has contributed to China's trade surplus reaching $1000 billion in 2024.
Despite the tight control over the media and the internet by the Chinese government, stifling any free discussion about the impact of the trade conflict, sales of Chinese solar panels at reduced prices are booming in Africa.
European manufacturers also struggle to obtain enough rare earth magnets, with Beijing pressuring the European Union to drop tariffs on Chinese electric cars. The trade surplus has widened to $785.8 billion as of August 31, up from $612.6 billion a year ago.
In conclusion, China's economic growth in 2024 is a complex interplay of successes and challenges. While the country continues to make strides in export markets and infrastructure development, the trade war with the US and the real estate market downturn pose significant hurdles. The future of China's economy will depend on how these challenges are navigated.
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