Striving for more independence: study sees China going its own way

Thursday January 14, 2021

Striving for more independence
Study sees China going its own way

China's economy is the winner in Corona year 2020. Beijing is one of the few countries that can report growth. At the same time, according to a study, the country is moving away from other industrialized countries. This could endanger trade flows. A new US policy is also not in sight.

China's economy shows strength. As a sign of the sustained recovery after the Corona crisis was overcome, the People's Republic's foreign trade once again developed significantly positively in December. As the Beijing customs authorities announced, exports in December rose by 18.1 percent year-on-year. Imports rose by 6.5 percent. China's foreign trade looks robust over the year as well: Despite the difficult conditions in the Corona year, the world's second largest economy sold a total of 3.6 percent more abroad in 2020. Imports fell only slightly by 1.1 percent. Since the most populous country on earth has had the coronavirus largely under control since the summer and only counts a few infections, economic activities have returned to normal.

While the rest of the world is experiencing a recession, analysts believe that China was the only major economy to have recorded growth in the past year. The International Monetary Fund (IMF) recently expected China's gross domestic product (GDP) to grow by 1.9 percent for 2020. According to the forecast, growth this year should even be 7.9 percent. China announced its growth figures on Monday.

European companies doing business in the People's Republic are also benefiting from the recovery of the Chinese economy. However, she is also very worried. They warn of new risks. It is feared that China and the other major economies will drift further apart in the future, which will lead to disruptions in global trade flows. This is the result of an analysis by the EU Chamber of Commerce in Beijing and the China Institute Merics in Berlin.

The experts warn that the tensions between China and the US are likely to continue under the new US President Joe Biden. In view of growing reservations in the West, China is increasingly relying on making its own economy more independent.

A Biden government will probably act "less sharply". The non-partisan consensus in Washington to regard China as a strategic competitor, however, means that globalization is unlikely to simply return to normal.

Complicated and stressful

Decoupling tendencies are not only recognizable in supply chains in retail. China is also going its own way when it comes to data, the digital sector and industrial standards. European companies in China were also feeling the effects of Beijing's "more radical" push for independence. The effects of decoupling are both "complicated and burdensome" for European companies, especially because they are currently trying to benefit from growth in China after the corona pandemic.

After seven years of negotiations, China and the EU had basically agreed on an investment agreement at the end of December. The agreement aims to improve market access for European companies in China, ensure fair competition and open up new business opportunities.