Many analysts have expressed alarm about the impact of China's growing dominance in global trade. Yes, despite the combined effects of the coronavirus pandemic and the trade wars involving the US and China, multiple indicators suggest that China will continue to grow impressively through the next year. In fact, China is likely to become one of the foremost contributors to global trade growth in 2022 and beyond.
Undoubtedly, China's economy is currently on a positive trajectory. All the crucial indicators look good for China's 2022 prospects. Considering factors like the Purchasing Managers' Indexes (or PMI), banking lending, and electricity consumption, all seems to be well and booming for China. In contrast to what many thought, China's consumer demand actually experienced a significant increase in 2020 and 2021. The domestic and foreign market demands grew strong. No wonder the Chinese government has continued to invest heavily in efforts to turn China into a veritable tech superpower; for the most part, these efforts have paid off handsomely.
What makes China's economy so competitive in the 21st century? China's rapid economic growth since 1949 has done much to boost the livelihoods of millions of citizens. But think of these statistics: According to a study carried out by the Peking University research scholars in 2016, some shocking facts call for urgent attention. The study revealed that 1% of China's richest households actually hold 1/3 of the nation's total wealth. On the other hand, the poorest 25% of Chinese families have a mere 1% of the nation's wealth.
As noted, one major point of anxiety is China's economic growth trajectory. The economy slowed down a little in the past few decades, and this had some policymakers worried. In 2020 the Chinese economy surprised all and sundry by growing by 2.3% in spite of the raging Covid-19 pandemic. However, pundits observed that this was the slowest economic growth pace since the death of the legendary Mao Tse Tung in 1976. But China had actually achieved a distinction- she became the only major world economy to grow significantly at a time the Covid- 19 pandemic was gripping the entire globe. Some experts are also worried about China's large accumulation of debt. They are anxious about a looming debt crisis. At the same time, the continued volatility of China's stock market raised questions about the country's ability to implement proper economic reforms. Unperturbed, the Chinese ruling authorities have acted to seize control of both state-owned and private companies.
China's political elite has endeavored to embed its wings across every layer of Chinese society and economy to ensure everything is in control. Nevertheless, China's key governance structures are mostly decentralized. Many Chinese provinces actually enjoy an impressive level of autonomy. China's sub-provincial officials and other leaders appointed by the central authority have virtual control over the way local governance is managed. However, as we advance to the decades beyond 2021, China must endeavor to address other pertinent issues. As noted, the government must address the massive economic disparity that has bedeviled the country for more than five decades.
But there are a few complexities lurking behind the headlines. In the first place, China has experienced heavy inflation in basic food prices over most of 2021. This was primarily driven by the dynamics of the raging Sino- US trade wars. Notably, analysts observed that the typical Chinese household budget is currently characterized by significant spending on food. Overall, the Covid-19 pandemic did not affect China's economy anywhere near what analysts had earlier predicted.
To illustrate, the transition to remote working (for most office workers) went on much more smoothly than most people expected. It even occurred without a net loss to the national economy. Elsewhere, of course, the story was the same. For example, in the US, remote workers actually contributed a whopping $1.2 trillion to the national economy in a single year- 2020. This was an impressive 22% increase from the 2019 figures. In China, this was even more pronounced.
The prospects for increased foreign trade beyond 2021 seem to be encouraging. In the next year, the world is likely to see the nation's share of global trade growing rapidly over the course of the years. Looking back at the pre-pandemic trend, China significantly increased its volume of high-value finished goods. As a result, there's a high demand for Chinese goods- both domestically and abroad.
Liang Ming, who works for the Chinese Academy of International Trade, recently made an interesting prediction. The scholar predicted that China's total foreign trade would reach somewhere near 5 and a half trillion dollars in December 2021. Interestingly, a short while after the scholar made his prediction, analysts observed that China's market conditions have become much more positive for most regular exporters.