1. China’s Expansion
China is actively contributing to the global development agenda, yet also faces numerous domestic obstacles. It must tackle its debt overhang, inefficient state-owned enterprises and ethnic unrest in Tibet and Xinjiang.
Beijing is also building a powerful military to project its power abroad. This marks an evolution from Beijing’s traditional defensive posture, which involved fighting internal rebellions and invasions from the north.
China is seeking to expand its maritime influence in the South China Sea (SCS) by building military bases along remote reefs and islands. These initiatives are part of China’s bid for control over the region and to become Asia’s dominant regional power.
2. China’s Economy
China’s economy has expanded rapidly in the last several decades, lifting hundreds of millions out of poverty. Yet the country continues to face many obstacles such as economic imbalances and environmental issues.
The country’s growth model has reached its limit and must find new drivers of growth to accommodate an aging population, high investment levels, declining returns to labor force members and slowing productivity gains. To do this, shifts must be made in the structure of the economy from manufacturing to services; from investment to consumption; and from high carbon intensity to low.
Despite slower growth, the government has taken steps to stimulate activity. It has ended several key policies like anti-monopoly and data crackdowns that took hundreds of billions off shares of China’s tech companies on foreign exchanges. Furthermore, it has eased controls on real estate financing.
3. China’s Technology
China is making significant advancements in a range of technological fields. These include artificial intelligence, 5G mobile communications (5G), quantum communication and information processing, semiconductors (integrated circuits), biotechnology and green energy sources.
China was once heavily dependent on the Soviet Union for many of its technology imports, but President Xi Jinping has made it clear that China intends to become a true technology power.
Focusing on indigenous innovation will be essential for its success, and the United States must closely monitor Chinese military and technological developments as well as engage with their Chinese counterparts. It is up to the US government to exercise caution, address emerging safety, technical and legal concerns promptly, and avoid unintended escalation.
4. China’s Trade
China is a major player in global trade. As the second-largest economy by nominal GDP, it provides an important source of imports.
Despite strict policies, the country has become more open to foreign trade. Recent trade policy initiatives by China include cutting import tariffs for daily consumer items like apparel, footwear and headwear; sundry groceries items; kitchenware; fitness products; home appliances; as well as some chemical items. It also promised to expedite free trade agreement negotiations. Although the country has a well-developed domestic market, trade tensions with the US remain high. Although economic growth in 2020 is forecasted to accelerate slightly faster than 2019 levels, it will still lag behind the USA in terms of GDP per capita.
5. China’s Investment
China is investing heavily in Asia as part of its ambitious Belt and Road Initiative, launched by President Xi Jinping in 2013. This massive infrastructure project would link East Asia to Europe, vastly increasing China’s economic and political influence.
The Belt and Road Initiative (BRI) is one of China’s most ambitious development plans, designed to combat slowing economic growth and troubled trade relations with the United States. To link Asia to the rest of the world, BRI includes a network of railways, energy pipelines, highways, and modern border crossings that span across Asia.
China is seeking to increase investment in key sectors like semiconductors, high tech manufacturing and green energy in order to reach its MIC 2025 objectives. However, there are significant institutional and reform gaps that must be addressed for China to embark on a sustainable growth path.
