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A Look at China's Trade

China Posts Another Huge Trade Surplus

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Chinese Electric Vehicles Are Experiencing Particularly Strong Growth

Meanwhile, as is well known, Brussels is discussing trade measures to protect certain EU industries from market-distorting low-cost imports from China. In early October, both sides agreed to curb imports of hybrid vehicles from China. However, the restriction has not yet taken effect, which is why experts believe manufacturers are likely trying to export their cars to Europe before the new regulation goes into effect. China’s auto exports have also been rising rapidly for months, while domestic vehicle sales continue to decline. The China Passenger Car Association (CPCA) therefore recently reported a 68.2 percent increase (compared to the previous year) in its October statistics. As a result, exports of so-called new energy vehicles—which include hybrid and fully electric cars—surged by 144.7 percent.

China Is Currently Weathering Significant Deflationary Pressures

It’s also important to remember that the Communist Party aims to achieve economic growth of 4.5 to 5 percent by 2026. To that end, it is counting on foreign demand—and thus on exports, which drive China’s economy. China is benefiting from current price trends! In October, inflation rose by 0.7 percent year-over-year due to lower food prices—a weaker increase than expected. At the same time, according to statisticians, higher global energy prices contributed to the rapid 5.7 percent rise in producer prices. China appears to be overcoming years of deflationary pressure. However, experts believe that this pressure remains effective beneath the surface and is being overshadowed by rising energy costs resulting from the war in Iran.

China Is Grappling with these Internal Problems ...

However, weak consumer spending in China is also a factor behind the low inflation. Due to the real estate crisis that has been simmering for years, the value of homes, for example, has fallen, which is eroding homeowners’ confidence. In addition, youth unemployment remains high! In September, it stood at 18 percent among people aged 16 to 24. Pressure on the labor market thus remains high, while concerns are growing that AI could replace jobs for entry-level workers. The recent slump in the Chinese stock markets dealt another blow to confidence. Tech stocks, in particular, have been under pressure since July. As a result, Beijing has now announced stabilization measures to make share buybacks more attractive, for example. And according to media reports, Beijing also pumped money into funds through the so-called “national team” of state-backed investment firms to bolster the markets.

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