One reason for China to rejoin: its troubled economy

One reason for China to rejoin: its troubled economy

Three months ago it appeared that China’s economy was on a relatively rapid recovery path after being shut down from around the world during the pandemic. Consumers were spending again. Exports increased. Even China’s troubled housing market has shown signs that it is stabilizing.

That is no longer the case. Official data released Monday showed the annual pace of growth in China’s economy slowed to just over 3 percent in the spring, well short of the government’s target.

Now the faltering economy has helped spur a change in senior Chinese officials’ willingness to engage in diplomatic talks with geopolitical rivals abroad and show greater openness on economic policy at home.

The change in tone is particularly visible in China’s relations with the United States. Despite years of poor relations and concerted efforts to become less dependent on each other, the two countries are closely linked economically, together producing two-fifths of global output.

In the past month, China has welcomed three senior US officials to Beijing, including President Biden’s climate envoy John Kerry and Treasury Secretary Janet L. Yellen, who held 10-hour meetings with top Chinese officials. Three Chinese ministers are expected to travel to Washington in the coming weeks as the two countries begin discussions on everything from climate change to climate change. military issues,

The Chinese government has also been aggressive on domestic and international business leaders.

During the China Development Forum in March and the World Economic Forum in Tianjin last month, Li Qiang, the country’s premier and second-largest official, gave personal assurances that China was open for business.

Mr. Li met with China’s big tech companies last Wednesday and encouraged them to hire more employees, signaling that a nearly three-year effort to assert more political control over the region could lead to economic growth. Can be changed with emphasis on. China’s top economic planning agency, the powerful National Development and Reform Commission, praised the companies for their investments on the same day.

“China’s decision-making ability is as hidden from our view as it was before, but China’s economic weakness is obvious to all, even to China’s leaders, which cannot help but The recent easing in policy may be a source of will. Get Washington involved,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies in Washington.

Still, analysts said any softening of the outlook remained limited to economic or business policies, not including China’s national security, which has become a defining feature of Chinese policy in recent years. And there are few signs that top leader Xi Jinping favors a broad policy shift toward the United States, a move that would be necessary to root out any change.

On Saturday, China announced that it would conduct joint naval and air force exercises with the Russian military in the Sea of ​​Japan. and Mr. Xi himself gave one speech on 6th july It urged the military to “break new ground” in preparing for war, according to the official Xinhua news agency, warning that “China’s security situation is facing increasing instability and uncertainty.”

China has also taken steps this month that could undermine its reputation as a reliable link in global supply chains. It said it would limit exports of rare materials needed to make semiconductors, in a move widely seen as retaliation for US limits on sales of advanced semiconductors to China.

“Domestic risks are primary, so he is not looking to take more risks,” said Jessica Chen Weiss, a Cornell University political scientist specializing in China-US relations. “But if he is punched, he will also punch back.”

Chinese Foreign Ministry spokeswoman Mao Ning said at the ministry’s daily briefing on Monday that China’s economic power has not diminished and there has been no change in the development of its relations with countries around the world. “We also hope that the US side can work with China to put bilateral relations back on the path of healthy and stable development,” he said.

Some China experts said they also do not believe that China’s recent economic troubles have hindered the country’s approach to foreign involvement.

Da Wei, director of the Center for International Security and Strategy at Tsinghua University in Beijing, said the United States is unlikely to change its policies aimed at curbing China’s technology progress. Therefore, China has little incentive to compromise regardless of macroeconomic issues, he said.

“Talking about the short term, like the recent deterioration in relations between the US and China, I don’t think there will be much impact on the economy,” he said.

But for China, the latest batch of data suggests that economic pressures may continue to encroach on geopolitical objectives. A key index of housing prices declined last month, leading to a decrease in consumer wealth. Exports – a key driver of China’s economy – are suffering.

And the investment picture has become hazy. American companies have complained that doing business in China has become more difficult amid the government’s focus on national security. Authorities have raided firms and detained personnel, especially among due diligence companies that multinationals employ to investigate potential business partners or takeover Chinese companies.

The geopolitical climate is at the heart of decisions about whether companies and investors want to invest in China or rely on it as a base for exports.

Economically, China has a lot at stake. Hundreds of millions of jobs in China depend on global trade. Its sales of goods manufactured in other countries are three times more than its purchases of these goods from other countries.

Those important trade ties extend well beyond the United States. China’s tilt towards Russia over the Ukraine war has seriously damaged its relations with Europe. China’s exports to the European Union fell 14.2 percent in June from a year earlier.

The Baltic countries – Lithuania, Latvia and Estonia, which are particularly hostile to Russia – have abandoned China’s diplomatic process for talks with Eastern Europe. Lithuania has forged close ties with Taiwan, an island democracy over which Beijing claims sovereignty. China retaliated last year by severely reducing trade with all three Baltic countries, notably blocking almost all imports from Lithuania. This enraged the rest of the European Union.

China has tried to repair deteriorating relations with countries such as France and Germany in the past few months with an even more extensive exchange of top-level visits.

It may be too late. Germany released a new national strategy last Thursday that called for reducing economic dependence on China and encouraged China to stop using its economic leverage in geopolitics. Germany also promised closer ties with the United States and urged China to distance itself from Russia.

China has over the past few years relied heavily on disrupting trade with other countries to persuade them to accept Beijing’s policies, doing the same with Australia, the country that originated the Covid pandemic. suggested investigation. But China has actually lifted import restrictions on many Australian goods in recent months.

“China has a special responsibility to make the system work because it is now the world’s largest trading nation,” said Alan Wolfe, former deputy director-general of the World Trade Organization.

li yu Contributed to research.

Source link

Leave a Comment

Your email address will not be published. Required fields are marked *

+ 30 = 31