Dr. Muqtadeer Khan, during his show “Khanversations with Prof. Muqtedar Khan,” delved into the current state of the Chinese economy. Dr. Muqtedar Khan, a Professor of International Relations at the University of Delaware, shared insights on a recent report regarding China’s economic status.
Key Points
- Recent data points to a significant decline in exports, impacting the China’s economic growth.
- Geopolitical factors and global economic challenges are contributing to the economic downturn.
- Western nations are reducing their reliance on imports, affecting China’s trade dynamics.
- Europe’s economic struggles and inflation have led to reduced imports and slowed growth.
- High-tech manufacturing and electronic exports have been adversely affected, indicating a broader trend.
He found the report to be intriguing, specifically focusing on China’s export and import figures for July 2023 in comparison to the previous year. Export figures had seen a decline of 14.5%, while imports had decreased by 12.4%. These numbers carry significant implications for China, given its economy’s heavy reliance on exports. Despite its large population, the domestic demand seems to have also decreased, indicative of a potential decline in purchasing power among the public.
Dr. Khan noted that last year’s July data was already affected by the impact of Covid-19, as China underwent an extended lockdown period, resulting in a delayed negative effect on the Chinese economy. Recovery was subsequently slow, with no clear signs of a return to previous levels of economic activity. The recent data highlights a more substantial decline, particularly when looking at the year’s beginning: Chinese exports were down by 5%, and imports faced a 7.6% reduction.
He further analyzed data pertaining to China’s trajectory, revealing a drop of 20.8% in oil imports and a 17% decline in integrated circuit imports. This indicates a decrease in the manufacturing and export of high-tech products, reflecting a broader trend of reduced electronic exports. China’s previous advantage in these areas, particularly over Western nations, seems to be diminishing.
The decrease in oil imports hints at reduced energy consumption, affecting both the transportation and manufacturing sectors. This suggests a decrease in both production and trade volume, further contributing to the economic decline.
Dr. Khan posed a critical question: Is this decline in the Chinese economy primarily a result of global economic challenges or geopolitical factors? He noted that two major contributors to China’s economic losses are Europe and the United States. Chinese exports to the US have fallen by 23.1%, and exports to the EU have decreased by 20.6%, indicating a reduced dependency on Chinese goods.
Europe’s economic struggles are evident in its low GDP growth and higher interest rates due to inflation. This has led to reduced consumer spending and imports, negatively impacting China’s export-oriented economy. In contrast, while the US has experienced increased inflation and interest rates, its growth rate remains higher, positioning it more favourably than Europe.
Dr. Khan concluded that a combination of factors is at play. The West appears to be diversifying its imports away from China, thereby diminishing China’s economic growth prospects. The decline in Chinese imports from Russia, particularly by 8.1%, underscores the broad impact on China’s trade partnerships.
In essence, the economic data from China holds significant geopolitical implications. Dr. Khan suggests that the West may be overestimating China’s economic potential and resilience, potentially containing its growth through strategic trade diversification. He anticipates that the upcoming economic data for August and September will provide further clarity on the situation.