As China prepares to celebrate the 75th anniversary of the People's Republic on October 1, 2024, the nation reflects on its remarkable economic journey. From a mere 4% of the global economy in 1949, China's share has surged to approximately 19% today, contributing 31% to global growth over the past decade [0d904f45]. This transformation has significantly altered global economic dynamics, particularly benefiting the Global South [ce2c0018].
While China's economy expanded by 25.4% from 2017 to 2021, nearly doubling the U.S. growth rate of 9.3%, it faces challenges from rising protectionism and disinformation campaigns [e56a12fb]. Recent U.S. military efforts have aimed to discredit China's Sinovac vaccine, illustrating how disinformation can undermine trust in China's economic contributions [0d904f45]. Moreover, the U.S. House has passed a $1.6 billion budget for anti-China propaganda, further complicating the geopolitical landscape [0d904f45].
In a recent opinion piece, Wu Songbo from China Daily argues that U.S. claims of overcapacity in China's production, particularly in sectors like solar cells and electric vehicles, lack factual basis. From 2020 to 2023, China's merchandise exports accounted for 17.9% of its GDP, closely aligning with the developing economies' average of 17.7% [e077735c]. This suggests that the narrative of overcapacity may be more reflective of U.S. economic concerns than actual Chinese economic practices.
Despite these challenges, China's exports rose 8.7% year-over-year in August 2024, reaching approximately $308.65 billion, indicating resilience in the face of domestic demand issues. The trade surplus expanded to $91.02 billion, showcasing China's ability to maintain strong export figures despite external pressures [6757c6d0].
The trade relationship between the U.S. and China remains intricate, with bilateral trade totaling 3.15 trillion yuan (approximately $432 billion) in the first eight months of 2024, a 4.4% increase year-on-year. Exports to the U.S. reached 2.38 trillion yuan, up 5%, while imports totaled 778.93 billion yuan, reflecting a nuanced economic interdependence [5ede08ff].
However, the sustainability of this growth is uncertain as factory activity in China has contracted for the fourth consecutive month, and producer prices fell by 2.7% in August [98d06076]. The ongoing trade wars initiated by the Trump administration have shifted global economic leadership from the U.S. to China, with China contributing over 30% to global growth over the past decade [ce2c0018]. The primary threat to global recovery now lies in Western protectionism and sanctions, which could hinder China's continued economic ascent and its pivotal role in global growth [0d904f45].
In a recent analysis, Greg Jensen, co-CIO of Bridgewater Associates, suggested that the U.S. might benefit from adopting aspects of China's 'quasimodern mercantilist system.' He noted that this approach has enabled China to dominate key industries, including electric vehicles (60% of manufacturing capacity in 2023), solar power (80% in 2022), and battery cells (75% in 2022) [0bf034b4]. However, this central planning has resulted in significant industrial overcapacity, a rising debt-to-GDP ratio of 116.9% in 2023, and household spending that is 20 percentage points below the global average in 2024. A 2020 World Bank analysis emphasized the need for reallocating resources from inefficient state-owned enterprises (SOEs) to more productive private firms, a sentiment echoed by Stanford's Center on China's Economy and Institutions, which found privately owned firms to be more efficient than SOEs [0bf034b4].
Moreover, China's economic outlook appears bleak, with 31.2 billion square feet of unused housing inventory reported in 2024. Jensen argues that instead of copying China's policies, the U.S. should focus on free trade, deregulation, and privatization to enhance its own economic performance [0bf034b4].