underlying problems in PRC trade resilience

Gong Jiong 龚炯 Chongyang Institute for Financial Studies senior research fellow shares his insights on global trade and implications for the PRC

• global economy
  • Gong expects global economy and trade to remain stable, at least in 2025
  • PRC trade is leading economic growth and this trend will likely continue
• global trade will remain stable
  • structural adjustments have occurred in global trade over the past three years
    • e.g. trade and supply chain shifts brought by the Russia–Ukraine conflict 
  • these changes have led to new market balances emerging, but they have also largely stabilised
• PRC–US trade risks
  • Trump's trade, tariffs and dollar policies will likely bring significant changes
    • decoupling is inevitable, but its pace may vary
      • a gradual decoupling process would be more desirable for the PRC
    • the PRC–US trade imbalance is not sustainable in the long run and is a concern
      • solving which requires structural changes
  • Trump will likely want the US dollar to go weaker and let the interest rates come down
    • a weaker dollar helps the US maintain its global leadership
    • but this is not beneficial to PRC exports
• the PRC's resilience and leading position in global trade, though positive, is not sustainable 
  • PRC trade comprises some 18.7 percent of global trade, its surplus account for some 15 percent of its total trade
    • this poses economic and political challenges
  • there are risks and challenges that need to be addressed for sustainable development
  • the PRC should face this challenge head-on and consider remedies such as expanding imports and overseas investment