Bloomberg: China's attempts to avoid recession could lead to a trade war with the United States
China's attempts to avoid a recession by investing in manufacturing and increasing goods exports could lead to new trade wars with the United States, Europe and other countries. Such consequences for the world predicted Bloomberg analysts.
Due to economic problems, China has shifted its focus to manufacturing instead of real estate, which previously accounted for about 20 percent of the country's economic growth. The government has increased the issuance of loans to industrial enterprises so that they increase the export of various goods. Now China supplies about 45 percent of its goods to foreign markets, since the population cannot buy everything that is produced within the country. This helped avoid a recession, but led to the risk of imbalances and increased trade tensions with other countries.
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The authorities of a number of countries began to respond by increasing supplies from China and introducing protectionist measures. The EU has launched an investigation into Chinese electric vehicles. According to the head of the European Commission, Ursula von der Leyen, China's policies could undermine the European industrial base.
In November 2023, Chinese exports grew for the first time in six months, adding 0.5 percent year on year. It was possible to achieve growth against the backdrop of a decline in export orders, which was recorded for the ninth month in a row, largely due to discounts provided by factory owners struggling to attract foreign buyers. At the same time, production costs have been rising in the country for the fifth month in a row.
A situation in which China's total exports exceed imports threatens the development of key sectors of the European economy and the region's transition to climate neutrality, EU foreign policy chief Josep Borrell said. According to him, the trade imbalance in relations between China and Europe doubled from 2020 to 2022 and reached $277 billion. Such dynamics were due to the increased demand of citizens of European countries for electronics and other types of equipment from China for working remotely amid the pandemic.
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