Economic development in ChinaAs 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 range above five percent in the five years ahead. Regarding the impact of the coronavirus pandemic, the Chinese government is comparatively successful in containing its negative effects and China is the only major economy that was able to maintain positive economic growth during 2020. Both unemployment and inflation, although effected by the pandemic, soon 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 decreased in recent years, while employment in the service sector has increased.
Trade and international relationsAs the world’s largest exporter and second largest importer, the merchandise trade balance of China amounted to a surplus of over 535 billion U.S. dollars in 2020. In the past, the United States used to be China’s largest trade partner, but under the influence of a trade war, trade between these two countries decreased. Disputes over trade and international influence also harmed China’s relationships to other countries like Australia, Canada and India.
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.