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Recently, the World Bank has updated its forecast on the global economy, which is expected to expand around 4% in 2021. Some may think that this number could be over-optimistic considering new lockdowns in not only Europe but China also. On the other hand, central banks continue to approve new stimulus measures, or at least show their preparedness to act when necessary.
For example, during the recent conference Janet Yellen, President-elect Joe Biden’s choice as Treasury secretary said that the incoming administration would focus on approving its $1.9 trillion pandemic relief plan, thus closing eyes to Republican arguments that the measure is too big given the size of U.S. budget deficits.
Meanwhile, the US is trying to find a balance during this stressful time, the Chinese locomotive achieves a full V-shape recovery. Despite the trade war, Covid 19, and global uncertainty, Asian giants were able to grow (+2,3%) during the chaotic 2020. If we dig deep into numbers, industrial production increased by 7.3% (YoY); Investment in fixed assets increased by 2.9% (YoY); whereas the trade surplus grew by 27% (YoY) and amounted to $ 535 billion.
Against this background, Yellen Yellen vowed to use a ‘full array of tools’ to fight Chinese economic abuse. According to the Hill, Yellen criticized the Chinese government for actions that have been widely condemned by economists and the international community, including dumping cheap products in foreign markets, illegally subsidizing domestic companies, imposing trade barriers, and stealing intellectual property. The question now is what Biden’s team plans to do. New sanctions? Delistings?
Earlier, the New York Stock Exchange claimed it would delist three state-owned telecom companies to comply with Donald Trump’s November order barring U.S. investments in Chinese firms determined to be owned or controlled by the military. It is worth mentioning that Biden was heavily involved in formulating China policy during the Obama administration. Now, however, Biden’s advisers “harbor no illusions that one can simply return to the prevailing politics at the time.”
Looking in the past, we could say that China won from the fact that the authorities were able to quickly take control of the spread of coronavirus and took the opportunity to get the most out of the pandemic:
In particular, they started to produce medical equipment for other countries. Chinese factories exported 224 billion masks from March through December, equal to almost 40 masks for every person in the world outside of China. The shipments were worth 340 billion yuan ($52 billion), which is about 2% of all Chinese exports in 2020.
China’s exports surge on hot demand for personal protective equipment (PPE) and electronics products for working from home. Once again, even a trade war couldn’t reverse the situation.
For now, some expect that China’s GDP will grow around 8%, but this could be overoptimistic, considering the fact that the world economy will begin to recover in 2021, and production in some countries may crowd out Chinese exports. Finally, who knows what will happen to Chinese – American relations…
As a result, certain analysts forecast that in the longer term, China’s growth will slow down. Howbeit, 2020 showed that Chinese exports are resilient to a pandemic and even trade tensions.
