Original by Dr. Steve Wong
September 11, 2023
In the early 2000s, I attended many international conferences, and each time, I was designated as the first keynote speaker. During that time, the world’s attention was focused on China. Some described China’s status as akin to when China sneezes, the whole world catches a cold. This metaphor illustrates China’s crucial global economic and political position.
In recent years, many Western nations have imposed economic trade sanctions on China due to ideological differences between Western countries and China, coupled with disputes over sovereignty, territory, and borders. However, fortunately, in regions such as Africa, Central America, South America, the Caribbean, Pakistan, and some Southeast Asian countries, China still commands a certain level of respect. This is primarily because China has engaged in significant infrastructural contributions, supported economic development, contributed to investments, and facilitated trade in these areas.
China’s economic growth once broke records continuously, leaving Western countries and others in awe. In just thirty years, China’s achievement was reflected in a Chinese saying [China surpasses the UK, and catches up with the US]. However, before the outbreak of the pandemic, China’s economic growth began to slow down. During the pandemic, China efficiently controlled the situation, and factories operated normally, exporting goods. However, orders gradually decreased after the pandemic, and many countries no longer wished to depend on China as their production base. With the ideological differences, some production lines were relocated to Southeast Asia or repatriated.
This year, foreign investment in China plummeted by more than 90%. Other worrisome indicators include a projected GDP growth of only 4.5% this year, a decrease in the CPI price index, a continuously rising unemployment rate, especially among young people, double-digit declines in exports and imports, and a heavy blow to the domestic market. This is because the mass failures of real estate enterprises have affected around sixty related industries.
This year, the central government has introduced various fiscal and financial policies to salvage the economy, but their effectiveness has been limited. The main reason is that mainland citizens fear investing and spending money. With the property bubbles accumulated in the past years and burst last year. The stock market declines, and enterprises shut down and leave the business, causing considerable anxiety among citizens. I recently came across a series of announcements on an online platform where companies declared suspension due to a lack of orders. Normal operations will unlikely resume until early 2024 after the Chinese New Year.
China is the world’s second-largest economy, and economic downturns in China are bound to impact the global economic recovery. China needs time to deal with surplus goods and real estate to reduce production costs and prices to enhance competitiveness. Therefore, signs of economic recovery may not be visible in the short term.