The world is on the brink of a global trade war: China's actions will lead to it - The Economist
A new trade war may break out in the world, which will have serious consequences for the global economy. The industrial policy of Chinese leader Xi Jinping could lead to a confrontation. Risks are also increasing against the backdrop of Western protectionism.
These are the conclusions of The Economist analysts. Chinese leaders are obsessed with lithium-ion batteries, electric vehicles, and solar panels. These technologies, as Xi Jinping has proclaimed, will become "the pillars of the economy." He is spending a lot of money to implement such a plan, which means that in the coming years his ambitions will be felt all over the world. The boom in industrial exports could well lead to a trade war," the article says.
Thus, China seeks to develop these industries to compensate for the decline in construction and consumption. However, this could lead to oversupply and dumping on the global market, causing dissatisfaction among Western politicians and trade partners.
At the same time, Western countries are increasingly taking protective measures against their industries. Skepticism about the Chinese economy is also growing, with anti-dumping and anti-subsidy investigations being launched against Chinese products. In response, China is already conducting its own investigations and imposing duties, for example, on cognac from Europe.
Analysts recall the consequences of the "Chinese boom" in the global economy in the early 2000s. Back then, 10 years after China joined the World Trade Organization (WTO), Chinese exports grew by more than 460%. The country did not hesitate to use outright dumping in literally all industries, especially in the chemical, metallurgical, and textile sectors.
"While the low-cost goods were great news for consumers, the changes were less welcome for workers from rich countries. Later, it became fashionable to blame the "China shock" that led to layoffs in affected industrial areas for contributing to Donald Trump's election victory in 2016," the experts remind.
According to their calculations, the upcoming manufacturing boom could be even bigger, given that the Chinese economy has doubled in size over the past decade. "Michael Pettis of Peking University notes that even if China simply maintained the current size of the manufacturing sector, which accounts for 28% of GDP, and achieved the goal of 4-5% GDP growth over the next decade, its share of global industrial production would increase from 31% to 36%. And if Xi Jinping's ambitions are realized, the growth will be even greater," the article says.
As reported by OBOZ.UA, China is already breaking all records in terms of the number of cars produced. They manage to offer the cheapest cars, which are quickly finding their niche in the Western market. This situation scared the largest Western automakers.