Western hedge funds, banks and short sellers are targeting China, Hong Kong, and South Korea. As geopolitics is proliferating in Asia, weaponization is spreading to markets.

India wants to reduce China’s footprint in its industrial chains. China must deal with this by strengthening its own industrial and innovation chains. It must also improve its policy on industrial chain transfers. It should avoid contributing to India’s development at the cost of its own.

China’s slowing economy has fueled a broad range of takes on why Asia’s dominant power is losing its growth trajectory. Whatever the real reason is, China’s regulatory crackdowns seem to be digging a deeper hole to fall into.

The narrative that China’s economy is nearing its peak – or has already reached it – has taken hold in Western media. But if you read the doomsayers’ analyses carefully, you will find that many of the reasons they give for their bleak assessments are not new. On the contrary, they tend to highlight precisely the same challenges that economists and commentators have been harping on for at least a decade or longer. If China was not sputtering then, why should we believe it is now?

China’s economic performance over the last year has been disappointing – so much so that some observers argue that growth has already peaked, and that it is all downhill from here. But it is far too soon to write off China’s economic resilience.

Western economies faced tight monetary policies and rampant inflation in 2023, while Asia faced mixed growth. 2024 will likely bring disinflationary forces in the West, contrasting with continued economic deceleration in China.

American protectionist economic policy and reduced Chinese imports in the United States has led to the phenomenon of “nearshoring.” Mexico has benefitted from this, having received higher foreign direct investment, particularly from China.

China must transition away from export-driven growth, particularly real estate sector, and focus more on domestic consumption, green technology and strengthening its social safety net.

Subsidies have evolved into dual-purpose instruments, serving as drivers of self-reliance and geopolitical tools. This transformation, spurred by economic strategies and national security concerns, blurs the line between economic prosperity and safeguarding strategic interests, urging the need for a unified global economic stimulus strategy and enhanced cooperation in new realms to navigate this complex interplay effectively.

Three major issues make things difficult at present, but the country is more likely to have higher growth after adjustments have been made. Supply-side reforms, fiscal support and a firm opening-up policy will be the keys to success.