China has the second-largest economy in the world. According to its plan, its GDP, as well as the income, should double in a decade. As a result, China would cement its reputation for global economic power.
To achieve this goal, China’s economy must grow by more than 6% in 2020. If this is going to happen, China will execute this ambitious plan. As a reminder, Chinese officials promised to achieve this goal by 2020. It means that China’s economy increased from 2011 to 2020, according to this plan.
China’s economy started to grow in the late 1970s when the government decided to open markets. Thanks to this decision, China was able to achieve what become the envy of many countries. It utilized the advantages of cheap labor along with aggressive central planning and devalued currency.
Thanks to all of the factors mentioned above, China transformed from a poor agrarian society to a prospering superpower. China became the second-largest economy in the world. Its GDP reached $13.1 trillion.
The gap between the U.S. and China is getting smaller and smaller and may even overtake the current leader.
Nevertheless, due to the trade with the U.S., this may not happen in the foreseeable future. Moreover, there are other issues as well.
It is worth mentioning that despite economic growth, China’s economy is not growing fast as it was more than ten years ago. For example, in 2007, growth peaked at 14.2%, but this number fell to less than 7% since 2015.
U.S. and China reached a phase-one agreement. However, it is a small part of the biggest problem. It won’t be easy to end the trade war. Meanwhile, China’s economy is suffering because of the connected with trade dispute.
Economy and trade war
It is possible to measure the damaged inflicted by the trade war. Fiscal revenue growth declined to 3.8% in 2019 from 6.2% a year ago. Moreover, export growth fell by 0.3% through November after rising 9.9% for the same period in 2018. U.S. exports declined by 12.5% in 2019. For example, in 2018, exports rose by 8.5%.
Based on the information, problems connected with exports took 1.3 percentage points off China’s GDP in 2019.
The trade war between the most significant economies is a severe challenge. However, China has several factors that may help to neutralize this problem.
People should remember that the People’s Republic of China is the most populous country in the world. So-called “supercities” will boost the local economy.
According to Morgan Stanley, 23 supercities will have populations larger than New York. It is worth mentioning that New York is the most populous city in the U.S. Moreover, five supercities will become home to 120 million people.
This move will offset the problems related to the aging population which is a major problem for the Chinese economy. A new wave of urbanization will solve some of the main issues of the economy.
Also, new technologies such as 5G will change the country. China plans to get houses connected, and as a result, a student will be able to use virtual reality to prepare homework, etc. This and other innovations will change China’s economy.