China after Coronavirus Pandemic
China was one of the first countries that managed to get the pandemic under control.
Still, the world’s key economy has been releasing mixed figures after it eased lockdown measures and reopened.
On the one hand, the nation’s GDP fell by 6.8% in Q1 of 2020, an unprecedented contraction since the country began reforms over 40 years ago.
The unemployment rate increased from 5.3% in January, when COVID-19 first emerged, to 6% in early June and there are reasons to believe that the real number is higher.
On the other hand, Purchasing Manager’s Index (PMI) expanded to 50.7 in May and exports grew by 3.5% in April.
The overall economic outlook is still unclear and the recovery road for the Chinese economy is yet to be determined.
The CNY strengthened versus the USD in June and July.
Now USD/CHN is in the key support area of 7.00. Big moves are coming.
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Will China Lead the Global Recovery?
It seems that the Chinese dragon is getting ready to dominate the global economy.
Step by step, China is close to overcoming the US economy and becoming the largest economy in the world.
Some expect that China will succeed in its endeavor during the next ten years, while it shakes the consequences of the Coronavirus crisis off to launch into the future.
A Comparison Between the Two Greatest Economic Powers
We will now make a comparison between Beijing and Washington to see who will tip the balance first.
We will review the global banks’ and international institutions’ forecasts in 2029 that show Chinese success.
To win this competition, China will bet on investing in the fields of artificial intelligence, biotechnology, genetic engineering, green energy, nanotechnology, neuroscience, computing, and robotics.
Meanwhile, the Trump administration is focusing only on imposing tariffs and sanctions to stop China, which will weaken the US economic wheel because it won’t have many strong muscles to rely on.
1. Gross Domestic Product
|USA GDP||China GDP|
|Before the Coronavirus in 2019||2.3% ($21.4 trillion)||6.1% ($14.1 trillion)|
|The Coronavirus recession in 2020||A sharp contraction by 8%||A slow growth by 1%|
|GDP Growth in 2021||A moderate speed by 4.5%||A jump in growth by 8.2%|
By 2029, the ples of the global economy are expected to equal at approximately $24.4 trillion in GDP.
By 2040, China will be the top superpower with a GDP of $64.8 trillion while the US economy will be estimated at $30 trillion.
2. Each Country’s Share of the Global Economy
That shows the strength of the Chinese dragon and its rapid speed to catch up with its American counterpart, along with Europe and Japan, carving out their shares of the global economy.
3. Total Exports
|Total USA Exports reached||$144.5 billion in May 2020|
|Total Chinese Exports reached||$206.8 billion in May 2020|
4. Growth of Industrial Output
|USA||15% by the end of May|
|China||4.4% by the end of May|
I think we don’t need to say much here.
Although Chinese industrial production is under severe pressure, it is much better than the US, as we see.
US and China Trade War
What did happen to the trade war and the deal between China and the US after the pandemic?
Of course, we can’t forget the fierce trade war that has been boiling between Beijing and Washington for two years and the mutual imposing of tariffs.
The two sides signed the first phase of the trade deal in January 2020.
It seems that this agreement is in danger now due to the coronavirus crisis, because China may be unable to commit to its pledge of purchasing the US products and goods, including soybeans, for an additional $200 billion, as the global recession that is dragging everyone down.
However, the two governments announced that they are comm.itted to the deal, whatever the case.
The trade war has returned to the global scene in recent weeks, as Donald Trump has repeatedly accused China of being the main reason the coronavirus has spread around the world.
Washington also has opposed the law of security imposed by China in Hong Kong because it violates freedoms.
As a result, Trump announced sanctions on several Chinese figures.
All of this would revive the trade war and can even turn to a new Cold War.
Solutions for US Economy
- Abandon imposing new tariffs on everyone, because its harm is greater than its benefit, especially while recovering from the coronavirus recession.
- Extend the trilateral trade meetings between the US and the EU to include Australia, Canada, South Korea, and the United Kingdom after Brexit; form new alliances to stand against China.
- Start a multilateral working group to face China’s economic activities that threaten national security.
- Establish initial free trade talks with emerging markets in the Indo-Pacific to strengthen ties with the region and reduce China’s influence.
Solutions for Chinese Economy
- Donald Trump remaining in the White House is the best solution for China’s benefit. If Trump continues his protectionist policies, the US economy will weaken, and the US will lose many of its allies. Washington is more powerful with allies, so China won’t be able to overcome it like this.
- Investing in technology and other vital sectors because they are the backbone of any economy in the future. Whoever controls technology controls the world.
- Taking advantage of the deadly coronavirus blow to the US economy because this pandemic has harmed the current leader of the global economy – the US, more than the rising star, China.
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