China’s Economic Recovery: Dependent of the Rest of the World?
China was one of the first countries affected by the global pandemic to show signs of economic recovery. This seems almost natural, given that it was the first country to be affected and subsequently gain control over the situation. However, data indicates that China may be the only major world economy to post any growth at all this year.
China does not exist in a bubble. As the world’s largest exporter, its economic recovery is critically dependent on the rest of the world; particularly its major trade partners, which include the USA (20%), Hong Kong (12%), Japan (6%), South Korea (4.5%) and Vietnam (3.4%). Therefore, with about a fifth of its GDP tied to exports, China needs to work to assist its trade partners to ensure sustained demand for Chinese goods.
In the USA (China’s largest trade partner), the pandemic has spurred a wave of reduced consumer spending, which is seriously denting demand. Thus, one of the most important steps China can take to ensure the health of its export industry and its economic recovery is to remedy its soured relations with the USA as a result of the trade war. This will help the world economy as a whole to sustain itself.
Pushing Belt & Road
The other major factor for China’s economic recovery is the Belt & Road Initiative (BRI), which accounts for about 17% of exports and provides the necessary infrastructure and regional access for continued trade. The BRI is pivotal to China’s global trade success. Its efforts in BRI countries provide regional access points for trade. For example, BRI projects in Italy provide access to European markets.
A Balancing Act
To ensure a sustained recovery in China and globally, the Chinese need to push assistance to BRI countries, while patching up trade relations and assisting major trading partners, especially the USA. However, while doing so, China must also be careful not to ruffle feathers and create further tensions regionally and worldwide.