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China, Domestic Demand and a US Challenge – A New Power

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Chinais now promoting itself as a leader in imports. This initiative led by President-for-Life Xi Jinping will be openly discussed at the China International Import Expo starting on Tuesday. While many view China as the manufacturer for the world, President Xi and Beijing want to change this longstanding perception, and encourage the world to believe that China is a big importer.

However, in our view, the numbers do not support the importer theory. As the world`s second-largest economy is trying to rely more on domestic consumption amid a slowdown in GDP or growth, real imports are falling and this is somewhat of an embarrassment for Beijing and its leadership. Imports in US dollar terms fell by 8.5% in September, more than expected while exports surprised by falling a disappointing 3.2%. Currently, the talk between the US and China is that China will increase purchases of American farm products as both sides seek a short term resolution to the increased tensions. The fact that China is moving into the world as a key power is for the most part, pushing the US aside and making claim to a key position on the world stage. This above mentioned exhibition will feature US firms such as John Deer, General Motors, Tesla (now building a factor in China) as well as Ford, GE and many others. The expo said that 192 US companies will attend the expo this year, which is up from last year`s 174 firms.

China is reaching out but is it enough and will it last. Either way, the US now has a key challenger to contend with – China.



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