As the head of state of China, Xi Jinping has a lot of trouble on his hands. The country’s economy is in trouble, with a consumer slump, real estate crisis, and trade war all putting pressure on the government. Xi has brought this on himself, through his claims to omnipotence and his absolutist political position.
This is a problem for the whole world, and especially for German companies. German companies depend on China more than any other country, and now they are facing the prospect of a long and deep economic downturn.
The International Monetary Fund has revised its forecast for Chinese economic growth downwards, meaning that the world’s second largest economy will only grow by 3.2 percent in 2022. This is good news in terms of the climate crisis and mass extinction of species, as it means that the global economy will not be growing at an exponential rate. However, economically, 2.7 percent growth is more of a sign of a global crisis.
Unless China succeeds in further expanding its Silk Road investment program, it is unlikely that the country will be able to pull the global economy out of this crisis, as it has done in previous years. This time, the crisis looks like it will be deeper and longer-lasting, with serious implications for the world economy.
Outlook
The next year looks to be a difficult one for the Chinese economy. Consumer confidence is low, the real estate market is in crisis, and the trade war with the US is taking its toll. Head of state Xi Jinping will have his work cut out for him in his third term.
The Chinese economy has been slowing down for a while now, and the IMF has revised its forecast for Chinese economic growth downwards. The world’s second largest economy will only grow by 3.2 percent in 2022, after 8.1 percent last year.
This slowdown is having a knock-on effect on the global economy, with the IMF forecasting growth of only 3.2 percent for the global economy in 2022. This is a far cry from the years of six percent growth or more that China has been used to.
German companies are particularly exposed to the Chinese economy, as they depend on China more than any other country. Now they are looking for answers to the challenge.
It is unlikely that China will be able to single-handedly prop up the global economy as it has done in the past. This time, the country is facing a longer and deeper economic slump. Inflation is now rampant in the industrialized countries, the financial markets are experiencing severe turbulence, and property prices in China and the US are tumbling.
The stock market has been in freefall since mid-August, with the German Dax losing around 25 percent of its value since January. The next year looks set to be a difficult one for the Chinese economy. Xi Jinping will have his work cut out for him if he is to turn the economy around.
