Chinese President Xi Jinping is gearing up for two crucial meetings with US President Donald Trump, but he is confronted with a domestic economy that is increasingly under strain.While China's export sector remains robust, the domestic economy is showing signs of significant weakness, which could complicate Xi's negotiating position with Trump in the coming year.
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washingtonpost.comDespite a global trade surplus that exceeded $1 trillion in the first 11 months of this year, China's internal economic indicators are troubling.Retail sales have plummeted to their lowest levels since the end of the "zero COVID" measures in 2022, and factory output has slowed to a 15-month low.
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washingtonpost.comInvestment levels are also declining sharply, and the ongoing property downturn continues to erode household wealth and consumer confidence.
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washingtonpost.comThe World Bank has projected that China's economy will grow by only 4.4 percent next year, marking the slowest growth rate in a non-COVID year in five decades.
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washingtonpost.comThis forecast is significantly below the Chinese Communist Party's target of around 5 percent, raising alarms among economists about the potential for a deeper economic crisis.
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washingtonpost.comXi's administration has long maintained a focus on boosting domestic demand and reducing reliance on exports.However, skepticism remains about the government's commitment to this strategy.Economists like Andy Xie argue that China has consistently prioritized technological development over consumption, which may hinder its ability to stimulate domestic demand effectively.
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washingtonpost.comThe reluctance to implement substantial stimulus measures, reminiscent of the post-2008 financial crisis response, further complicates the situation.Beijing's hesitance stems from concerns about the political risks and financial burdens associated with such policies.
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washingtonpost.comAs a result, the growing economic imbalances are creating vulnerabilities not only for China but also for the global economy.
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washingtonpost.comInternational Monetary Fund Managing Director Kristalina Georgieva has urged China to accelerate its efforts to achieve a more balanced economy, emphasizing that this shift would benefit both China and the world economy.
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washingtonpost.comHowever, the obstacles to achieving this balance are formidable, as experts note that a significant shift toward consumption-led growth would require dismantling decades of established production systems.
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washingtonpost.comAs Xi prepares for his meetings with Trump, the stakes are high.The US has expressed a desire for China to take the initiative in resolving trade tensions, with Trump stating that "the ball is in China's court." This dynamic places additional pressure on Xi, who must navigate both domestic economic challenges and the complexities of international diplomacy.
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aljazeera.comThe upcoming meetings are expected to focus on trade and economic relations, with both leaders seeking to assert their positions.However, the backdrop of China's economic struggles could limit Xi's leverage in negotiations.Analysts suggest that Xi may adopt a more hardened stance in his dealings with the Trump administration, believing that previous strategies have successfully countered US pressure.
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washingtonpost.comThe potential for renewed trade conflict looms large as both nations prepare for high-stakes discussions.With the US ramping up tariffs and export controls, and China responding with its own measures, the risk of escalation remains significant.
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aljazeera.comIn conclusion, as Xi Jinping looks ahead to his meetings with Donald Trump, the weight of China's domestic economic challenges could play a pivotal role in shaping the outcomes of these discussions.The interplay between internal pressures and external diplomatic efforts will be critical in determining the future of US-China relations.
