Economy remains strong but there are growing signs of structural weakness
Shipping containers at Nanjing port in China's eastern Jiangsu province. Amid a prolonged property market slump and lacklustre domestic demand, exports have emerged as the essential driver of economic growth in China. Photograph: STR/AFP via Getty Images
EY Entrepreneur of the Year: From AI in healthcare to Ballymaloe Relish and the largest cold store operator in sub-Saharan AfricaWhat might the economic battle between Trump and Kamala Harris mean for Ireland? But the export boom, which saw China’s trade surplus reach a record $99 billion in June, has caused disquiet among the country’s trading partners, notably in the United States and the European Union. This week, the European Commission confirmed new tariffs of up to 38 per cent on Chinese electric vehicles, a move followed a day later by Beijing’s announcement of a probe into EU subsidies for dairy products.
Last month’s meeting proposed 300 reform measures to be delivered by 2029, including some aimed at breaking down barriers to market access, improving access to finance and streamlining the legal and regulatory system. But the broad economic strategy remains the same, with a focus on strengthening supply chains and accelerating innovation in science and technology.
China’s emergence as the world’s leading producer of electric vehicles is a consequence of the plan, with central and local governments subsidising manufacturers and building the charging infrastructure to make the cars attractive. The scale and fierce competitiveness of the Chinese market has improved efficiencies and ensured that the top producers like BYD and Geely can produce high-quality, attractive vehicles at low prices.
“Housing has now decreased as a proportion of residents’ consumption expenditure, dropping to just over 20 per cent. In previous years, housing consumption expenditure accounted for about 30 per cent of residents’ consumption expenditure. So the simultaneous decline in investment and consumption in the real estate market has a significant negative impact on our demand and economy,” he said.
“We should also consider increasing the income level of low-income groups or improving their social security payments. We should accelerate the improvement of social security levels for farmers aged 60 and above. This gap is too large, which is also where our potential to expand consumption in the future lies. Our rural farmers have great consumption potential, but their income level is too low, which is also a reality of our national conditions.
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