Ever since the rise of China in 1980, it has been seen as a rival to challenge the US supremacy. Never the less, China has proved itself worthy of becoming the next power-house of the world with its world-class infrastructure, supply-chain, monetary and military might. However the recent clashes of China with the US is hurting both the economies with China taking the maximum hit, thanks to US's superior economy and say in the international forums.
China's GDP growth has been slowing down consistently and the numbers projected by CCP has been under constant scrutiny by economists around the world.Post trade war and ongoing COVID-19 crisis, country's industrial growth has also been hit hard.
China's manufacturing sector has been performing well throughout trade war and has recovered post peak COVID outbreak. Manufacturing sector has outperformed the global manufacturing index partly because of the massive dependence of the world on the raw materials and world-class supply-chain of the country. The country has also emerged as an unparalleled and unmatched destination for integrated industrial solutions.
The current rage against China has pushed its' current account deficit to $29.7 billion, which I personally feel won't be a disaster for them considering the fact that the country maintains a forex reserve of $3.399 trillion as of July 2020, and will be able to efficiently fund their future endeavors without much friction. But the worrisome part is the ever increasing pace of national debt to GDP which has mounted to 70%.A figure like that is sure to scare away investors in the long run and hurt the overall business sentiment and confidence.
However, the area which is hurting China the most is the defaults made by many African countries that has huge Chinese investments under BRI (Belt and Road Initiative). Africa owes more than $150 billion to Beijing, but the recent global events has pushed these financially unstable African countries into defaulting on their payments. Though these fundings could have been a part of the larger plan of China's debt trap diplomacy, it seems that it has backfired and triggered a chain reaction of voices speaking against China.
“Stop treating Africa as if we are unable to govern ourselves. When you talk to us,talk to us about how we can partner with you – and in a faster way", Amani Abou-Zeid, the African Union’s commissioner for infrastructure and energy said.
China is a huge economy but not huge enough to write off 1000 loans to 49 countries just in Africa for the loss of the BRI and no debt trap in action.
China's domestic market is massive and is still not tapped completely. According to the "consumer meet 2020", average household expenditure has touched $3000-$12000 in 2019.
Sales of premium product grew at 20% YoY.
Sale of luxury SUV saw a 10% YoY.
28% people buy impulsively, 46% buy from renowned brand, 14.5% buy online and 5% through retail creating a $3 trillion market.
But the year 2020 saw a drastic decrease in demand hitting the economy and stock market to reach an all time low of 6% negative. And finally the government was forced to come up with an stimulus package of $173 billion.Number of NPA is at all time high. Small and medium size banks are at high risk of declaring bankruptcy.Most of the Chinese markets are suffering from Corona Virus which has added to the burden of slowing domestic demand. The impact of Trade War has also played its part in ensuring decline of China.
The world saw the rise of USSR, but also the decline of USSR. The world saw the rise of China, and he world may also see the decline of China if it continues on its path of territorial expansionism.
China is a country which has proved everyone that democracy is not your only option and have pulled hundreds of millions out of poverty, prioritised education, spent on technology, and took tough stance to protect their national integrity. China is a natural leader but if the leader fails to respect everyone, the bleeding wound never clot and the leader will be finally replaced.