- As you are aware, China’s economic growth over the last few decades must qualify as nothing short of spectacular, miraculous, and inspirational. The way China has set the fast-paced growth in the manufacturing sector is worthy of emulation for several aspiring countries wishing to prosper. Yes, the global community may not be too happy with the way Chinese leadership has gone about expansionist intentions with stubbornness, aggression, intransigence, and devil-may-care attitude towards majority opinion. It also makes imminent sense for China to embrace such aggressive intent knowing fully well that none of the countries, including the sole superpower USA, are in a position to question the Chinese leadership.
PC: Smart Industry
- The air of authority and superiority displayed by Beijing is directly proportionate to the economic heft enjoyed over the decades, especially in manufacturing. Little wonder, China is anointed as the factory of the world producing innumerable products for the consumption of the global community. As reported recently in the newspapers, the Chinese are the first to hit the $1tn trade surplus milestone, which should be the envy of several aspirational countries aiming to follow suit. However, the Chinese leadership has a lot to worry about the way things are panning out on this front. The leadership needs to revisit certain aspects. Let’s discuss the same. China sold goods and services worth $3.6tn to other countries in 2024 and bought stuff worth $2.6tn.
PC: Mint
- The resultant outcome is that China finished with a trade surplus of almost $1tn – an all-time record even after adjusting for inflation. It’s a big leap from the $820-840bn surplus level China maintained over the previous two years and proof that it is indeed the world’s factory. The US is also a big manufacturer, but its propensity to buy more than it sells leaves it with a huge trade deficit – almost $1tn in 2022. It’s tempting to look at this as a tale of profligate West vs prudent East. Remember, Chinese was a byword for poor quality a generation ago; now, the world’s lapping up Chinese-made cars, phones, clothes, computers, and solar panels. The country exported 6.4m vehicles last year and is the largest manufacturer and exporter of electric cars.
- Imperatively, comparisons with India are inevitable, and some CEOs might take the podium now to press for a 90-hour workweek. Don’t Chinese workers regularly clock over 75 hours per week? But that’s missing the point. Indubitably, China is a manufacturing superpower because its govt pursued this end as a military goal. It aggressively used tariffs and subsidies to build scale and annihilate competition on cost. Many countries have even lower wages and contempt for labour laws, but none currently matches the Chinese scale. Hidden in China’s mammoth trade surplus is also a tale of desperation. Nothing creates jobs like factories, and China’s industrial boom has kept its population gainfully employed. Will it sustain forever? It’s a million-dollar question.
