CHINA ...TRADE WAR IS NOT THE PROBLEM IN THE COMING DECADE.

 

The global economy is going through slowdown phase but the gravity of the same will grow in the coming decade as various countries are focusing on cutting down import and in-house production.  Before I conclude this theory I would like to accentuate the depth of the problem for the Chinese economy and how the state is planning to cut down more on import and focus on domestic production. This is just the beginning of the era of the “Trade War” ripple effects on other economies policy framework. Don’t think that Trade war is resolved the problem is now going to spread like contamination to any industry based on different countries think tank.

You will be surprised to know that Chinese economic slowdown in the coming years will not be Trade war but its domestic rules and regulation which has created an immense revolt within china’s long term investments. The rules of the economic game have changed and now people are more concerned beyond bread and butter. Manipulation of data by china cannot survive the structural collapse of the economy.

What is the depth of slowdown of China is hard to measure since they have a protective policy in every activity. This is the culture of the Chinese economy but still when the pains are more in today’s technological driven world then these things cannot be hidden. China is not only heading for the massive slowdown but is struggling with consumption. Well, the consumption problem is a global problem since when the security of a job is at stake than it is bound to slow down.  I know that every economy even the Indian economy is betting aggressively on consumption theme but that is not going to work like magic wonders in the immediate basis.

The slowdown of China is an example to study how economic policies have been wrong and too much dependent on external factors rather focusing on internal factors to reduce the income inequality gaps in society. The Chinese economy is too much restricted and too much controlled which creates an atmosphere unsuitable to breathe. For example in Hong Kong, Sa Sa International the city's largest cosmetics retailer plans to shut down 20% to 25% of its stores in the next 18 months because of the city's "unabated difficult operating environment. Ease of doing opportunity is the next biggest requirement for China. There are many companies who are exiting china due to its stringent policy and control.

China is currently going through massive job cuts across industries. The unemployment rate of the consumption-and tourism-related segment rose further to a three-year high of 5.2 per-cent. In particular, the unemployment rate of the food and beverage service activities sector increased to 6.2 per-cent, the highest level in more than eight years, White colour jobs are also at stake along with blue coloured jobs. Chinese industries went for massive cut down of old industries and modernisation of new plants and machinery which has created massive lay off.

Now the situation is that trade war has led to significant slowdown on production and hence lead to poor job quality, unemployment and of wages which is common phenomena in an economic slowdown. These things might have been kept secret or rather tweaked data might have been shared in the public domain. Unemployment and society imbalances have now become a nightmare for China.

China is now desperate to get back into its feet and hence it will accept and adopt any policy whichever will save its GDP growth. The slow GDP growth has now spilt over the citizens and their living standards. China is now focussing aggressively to produce in-house Technology related gadgets so as to create employment and reduce import. The country plan to cut reliance on imports of key components to just 25%.

In 2018 the china has spent around US$320 billion to import integrated circuit products whereas the crude oil import was to the tune of US$240 billion. Well the way the 5G revolution is going to come up, the demand for chips, circuits and other technological equipment’s of Nanosize will increase and hence this is a big opportunity for many countries to create employment and focus on bridging income inequality gaps through job creation.

 Hence this industry of Chips is going to massive wealth creator and many countries will stop importing and will focus on domestic production. Now importing countries are now go-to face problem as many countries will close the door for one of the strongest everlasting industry and hence more trade war. 5G ancillary industry is a big opportunity for China to turn around in the coming decade.  China is already focusing on a massive aggressive expansion of its national manufacturing innovation centres. From 11 they plan to go up to 40 by 2025.  A quantum jump but at the same time a small burning issue which will evolve in the coming decade. The 5G related manufacturing exports are going to be the next battleground.

Now coming back to the slowdown story of china, the GDP will grow as trade deal might create some green shoots but the risk of any volatile movement in decision remains intact. China is struggling with unemployment and also now the housing price is coming down and also the production of the same as demand is now getting out the window. Average new home prices in China's 70 major cities rose 6.6% in December, slowing from a 7.1% gain in the previous month. But I find that technological knowhow fight will create more problem for the Chinese economy in the coming years.