Another Asian Economy Confronts a Protectionist Predicament: The Letter

Rutil Sharma’s article has debunked the notion of a continued boom in China’s reopening post-COVID-19. Old Chinese people are drawing parallels between the Chinese economy and Japan’s peak in 1990. They attribute weakening demographics and excessive debt fuelling investment as reasons behind this. Although Japan faced a protectionist backlash from the United States, China is currently going through the same experience, which could have broader global implications than the effect on raw materials such as iron ore and copper.

China’s economic slowdown could significantly hurt Germany, which heavily relies on exporting cars and machinery and has greatly benefited from China’s economy in the past. There is currently a decline in car exports to China, and Chinese-made cars are becoming more popular, aiming to take over Germany’s market. Additionally, Chinese investors have started investing in gold at prices higher than worldwide rates, which raises questions and doubts over the confidence in China’s economy.

In summary, the current situation in China’s economy has significant implications beyond the decline in demand for raw materials, and it is essential to keep a close eye on the situation for anyone involved in global trade.

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