Unpacking the ‘China Shock’: Global Resistance to Overcapacity in 2025

Unpacking the ‘China Shock’: Global Resistance to Overcapacity in 2025

China's economy in 2024 faces significant challenges, including economic decline, rising unemployment, and overcapacity, particularly in high-tech and manufacturing sectors. Xi Jinping's "new planned economy," which relies on state-driven investment, has led to deflationary pressures domestically and global economic disruptions known as the "China shock." International trade retaliation, including tariffs, has intensified, with countries like the U.S. and Russia responding to China's underpriced exports. The imbalance between China's production and household consumption, which is only 9.1% of global totals, exacerbates the problem. Looking ahead to 2025, China faces two options: internal reform to boost domestic consumption and reduce overproduction, or confrontation with growing global trade barriers. Effective reform would require enhancing consumer purchasing power through tax reductions, increased welfare spending, and prioritizing household consumption over industrial subsidies. Such measures could mitigate overcapacity while steering China toward a more balanced economic model.

Help me grow the channel by donating any amount through the link below—your support makes a difference!
https://paypal.me/DonXiang

Email me: [email protected]