Economic development in China
As the fastest-growing major economy in the world, China has maintained an average economic growth rate of over nine percent over the past 30 years, with growth rates gradually declining over the last decade. However, economic growth is still estimated to reach close to five percent in the five years ahead. Regarding the impact of the coronavirus pandemic, the Chinese government was overall comparatively successful in containing its negative effects on the economy and China is the only major country that was able to maintain substantial economic growth between 2020 and 2022. Both unemployment and inflation, although effected by the pandemic, returned to a comparatively low level.China’s economy has for a long time benefitted from its cheap and abundant labor force. Further pushed by the integration into global markets, China came to be known as the workbench of the world. As labor costs have gradually been rising over the years and the population ageing quickly, China has been making strong efforts to climb up the value chain, investing heavily in new technologies and the IT sector with the dedicated goal to transform China into a high-tech superpower. As a result, the share of the industrial sector in total economic output has generally decreased in recent years, interrupted only between 2020 and 2022, mainly due to negative effects of the pandemic on the service sector.
Trade and international relations
China is the world’s largest exporter and second largest importer. Leading trade partners are the United States, the EU, as well as East and Southeast Asian countries. China is running a huge trade surplus, which hit a record high of 878 billion U.S. dollars in 2022. The country’s current account surplus was the highest since the global financial crisis in 2008, a fact that has the potential to reignite former trade disputes, especially those with the United States.For the future, China’s approach to international relations and developments in China-U.S. rivalry will be of great importance. At present, both sides seem to be determined to reduce mutual dependencies of the two biggest economies in the world, even though this comes at the price of harming their own economic interests. However, economic benefits from cooperation remain to be very strong for both sides and may have a considerable balancing effect on the relationship.
