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China’s slowing economy pressures Xi Jinping to step back on the global stage

Byeditor

Apr 4, 2024

The extraordinary zero Covid years created a setback, and the expected post-Covid recovery has not fully materialized, leading to low consumer and business confidence. Before the Communist Party stopped publishing figures last summer, over a fifth of young Chinese people were unemployed. During a business summit in Shanghai earlier this year, the only bullish investors were those with an interest in electric cars. However, there are still bright spots in China’s future, such as the growth of renewables – Chinese EVs are expected to capture a quarter of European sales this year. Despite March data showing a recovery in factory activity and Citi analysts upgrading their prediction for the economy to 5% growth this year, concerns persist about the slowdown in China and the possibility of never escaping the middle-income trap.

When the then Foreign Secretary James Cleverly mentioned at the Conservative Party Conference last year that China’s slowing growth was leading it back to the negotiating table, there was skepticism. However, recent events seem to indicate that this may indeed be the case. President Xi’s visit to meet President Biden in San Francisco and the subsequent two-hour phone call have been interpreted as China’s move towards caution to ease external pressure on its economy. This is evident in Xi’s complaints about America’s sanctions hindering China’s progress in key technological areas such as semiconductors, AI, and renewables, as well as his objections to US support for Taiwan and the issue of TikTok.

As a result, there have been signs of a shift in China’s stance, with a decrease in aggressive rhetoric from Chinese officials, the removal of punitive trade barriers like the embargo on Australian wine, and renewed dialogue between the Chinese and American militaries. These developments could indicate a move towards a more conciliatory approach by China to address its economic challenges and global pressures.

By editor

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