Understanding How China Is Affected by the Complex International Landscape

Qiu Ping, Qiushi, June 4, 2024 —  

Far-reaching shifts in the external environment are having a profound bearing on China’s economic development. First, the development gap continues to grow, as multiple crises concerning food, energy, and debt have emerged at the same time. The global economic recovery has proved a difficult process, with momentum for growth flagging. Second, a backlash against economic globalization has emerged. The Cold War mentality, hegemonism, unilateralism, and protectionism are all on the rise, and the stability of global industrial and supply chains has been undermined. Third, geopolitical turbulence and regional conflicts have become more frequent. Regional hotspot security issues are emerging one after another. Global issues are also intensifying, and profound adjustments are taking place in the international economic, technological, cultural, security, and political domains. For China, all this inevitably means more headwinds and adverse currents in the external environment. The fact that we are pursuing development in a more unstable and uncertain world is an important factor we must consider when assessing the economic situation.

For example, flagging global economic growth and the contraction of external demand have greatly affected China’s export trade. Additionally, certain countries have overstretched national security concerns and politicized and weaponized economic, trade, and technological exchanges. They have pursued a “high-fence, small-yard” approach and instigated decoupling and supply chain disruptions, all of which have impacted Chinese participation in the global division of labor and development in the global market. The trends of localization and regionalization in global industrial and supply chains also have the potential to reduce the role played by China in these chains. In the face of these challenges, we must remain mindful of potential dangers, be prepared for worst-case scenarios and extreme situations, and ensure we have the ability to withstand high winds, choppy waters, and even dangerous storms.

The external environment has indeed become more complex and severe, and the risks and challenges have risen notably. But this has done nothing to change the resilience and momentum of the Chinese economy, nor has it weakened China’s position in and contribution to the world economy. In fact, amid these rapid global changes and deeper interactions between the domestic and international landscapes, China’s economy has actually become more competitive, and its strengths have become more obvious.

China’s economic aggregate, as a share of the global economy, has surged from 11.3% in 2012 to over 18% in 2022, with the average annual contribution to global economic growth exceeding 30%. China is playing a more pivotal role in global industrial and supply chains. Between 2012 and 2023, its share of the global manufacturing value added surged from 22.5% to nearly 30%. It leads the world in terms of manufacturing scale and production volume for a wide range of industrial goods. It is becoming a primary source of investment for a growing number of countries. Where once China was a passive recipient and proactive adherent to international economic and trade rules, it is now steadily becoming an important participant in formulating these rules.

As the world’s largest exporting nation, China provides a vast array of high-quality, affordable goods to countries across the globe. The facts have proven and will continue to prove that China has always been and will remain a crucial driver of global openness, a steady source of power for world economic growth, a vibrant and expansive market for countries to explore business opportunities, and an active contributor to the reform of global governance.