China’s economy is grappling with a series of mounting challenges, casting a shadow over its post-COVID recovery. Despite efforts to stimulate growth, the rebound has fallen short, compounded by a severe property crisis and demographic shifts towards an aging population.
Government interventions in capital markets, particularly through initiatives like Made in China 2025, aim to bolster key sectors such as electric vehicles and robotics. However, this approach has led to industrial overcapacity and escalated trade tensions, notably with the United States.
Amidst concerns over economic openness, Beijing’s policies are exacerbating capital flight, with foreign investors showing a growing preference for divesting from Chinese assets. While trade with traditional partners like the U.S. and Europe stagnates, China’s engagement with the developing world, particularly Southeast Asia, provides some compensation.
In response to Beijing’s assertiveness, bipartisan support in Washington is rising for measures to counter China’s civil-military fusion and perceived unfair trade practices. Export controls and investment restrictions are among the proposed actions to address these concerns.
Despite these tensions, the Biden administration aims to mitigate further deterioration in bilateral relations, recognizing the importance of mutually beneficial commerce. Businesses continue to seek opportunities for cooperation in areas devoid of national security implications, emphasizing the need for pragmatic engagement amidst geopolitical challenges.
