Imagine walking through the hustle and bustle of Shanghai’s financial district, with skyscrapers stretching to the sky and people going about their business. But what if everything we know about China’s booming economy suddenly changes?
Years ago, when Donald Trump was the President, he stirred up questions about China. It made Washington realize that China was growing powerful and assertive on the global stage. From concerns over how China treated the Uyghurs to the aggressive build-up of their military, the world was watching.
Today, there’s a big question mark over China’s intentions with Taiwan, a move that could reshape alliances and trust in the Pacific region. But beyond these power plays, there’s another vital question: What happens if China’s economy collapses?
An important factor from a geopolitical standpoint is that the specter of developing countries falling into the communist camp will be much less likely. Taiwan would be more safe, India’s sovereign territory will be disputed less and the South China sea would remain free and open, rather than under China’s assertions of control.
Here’s why analysts believe a collapse could happen:
- Population Decrease: China recently revealed that its population is shrinking, thanks to its old one-child policy and falling birth rates. They lost a whopping 41 million workers in just three years!
- Economic Indicators: China’s not sharing some of its economic numbers anymore, like its GDP and youth unemployment. It’s like a person hiding their report card because they got bad grades.
- Belt and Road Initiative: This was China’s grand plan to lead global trade. But now, countries are wary and even withdrawing from participation, it seems to be slowing down, if not failing.
- Political Ideals: Not everyone likes how China’s ruling party, the Communist Party, manages things. They believe in intense surveillance, less freedom, and promoting Han Chinese ideals, which don’t resonate with many outside China. Communist led economies always fail.
So, if China’s economy crashes, it affects all of us. China is like a big store where the US buys a lot of goods and services. If that store closes or faces issues, where will we get our goods? Also, the US sells goods and services worth $153 billion back to China. What if they stop buying? Remember the time when supply chains got disrupted during the pandemic, and our orders were delayed? A Chinese collapse could be much worse!
The economic situation in China is fragile. Even though it’s not crashing, its growth is slowing down. In the past, their economy grew at 9% annually, but now it might be half of that. This means big changes for countries and companies that depend on China.
- If China’s buying less, will airplane makers like Boeing need to make as many planes?
- What about wine growers in France or miners in Australia?
- And let’s not forget the debts and the challenges with their real estate market!
In essence, China is at a crossroads, and their next steps will influence not only their future but the world’s too. It’s time to keep our eyes open and think about how we prepare for whatever comes next.