Commentary: China's export boom is running hot - but one dependency could abruptly stop it
Beijing is exporting more than ever and holding to its course because the domestic market can no longer keep up. This is exactly what makes Xi Jinping dependent on demand that will not last forever.
Chinas export-driven economy is accelerating at an unprecedented pace. In September, exports surged by over 36 percent compared to the same period last year, and analysts predict that the country's trade surplus will surpass the $1 trillion mark earlier than anticipated this year. This isn't an anomaly; it's the norm, and understanding why Beijing continues to press forward despite negotiations with Europe and the United States requires a closer look at China.
The driving forces behind the export records are rooted within the nation itself. Domestic demand remains weak, businesses overproduce beyond demand, and they compete fiercely among themselves to erode margins. Foreign markets are seen as the escape route. It's a fact that China's economy is innovative and has reached the pinnacle of global competition in numerous sectors.
It's beneficial for Europeans to feel the pressure of Chinese competition and even gain a foothold. However, it's also true that a weak currency, pricing structure, and continued low labor and energy costs are all contributing to China's export success. The yuan may be undervalued, and by extension, the entire economy is likely overvalued.
Written by urgent.news from Handelsblatt's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
