Trump Makes China Great Again

Assumptions about US' decline are making China bolder and more overbearing in its approach towards India

- SHYAM SARAN

During my visits to China in 2023 and 2024, I encountered a subdued and even pessimistic mood among my Chinese interlocutors. The Chinese economy was in the doldrums, thanks to a pervasive crisis in its property sector, which had been the main engine of accelerated growth for the past four decades.

The property sector constituted 30 percent of the annual gross domestic product (GDP) growth and spawned many ancillary industries, supporting its rapid development. When the property sector collapsed in 2021, the knock-on effects reverberated throughout the economy. The economy is still facing deflationary pressures as consumption demand remains flat.

In the absence of decent returns from bank deposits and volatile returns from equity markets, property investment became a preferred route for investing personal savings because it promised sustained appreciation in property values. The sharp decline in property values has wiped out the savings of a large property-owning segment of society, and this has depressed consumer demand.

There is also a shortage of employment opportunities for the younger and educated youth entering the labor market. Over the past three years, unemployment in the age group 18 to 25 years has remained stubbornly at 25 percent. Last year, one respected Chinese interlocutor described the economic situation as "dire," compounded by fears of an impending trade war if Donald Trump returned to power in Washington.