China Has a DISMAL Problem – Will it Trickle Down to Us?
For decades, China has been using its exports to finance its military and surveillance capability. Now, suddenly, the communist state seems to have hit an economic speedbump. Exports and imports both fell sharply in October. That’s bad news for the Chinese, but some experts worry it could be bad for the US too.
What’s Going On With Chinese Trade?
On November 7, China released the latest economic data. The figures show a sharp and unexpected fall in both exports and imports, the first time both have fallen together since the peak of the first COVID panic in May 2020. Analysts had expected the country’s October export figures to be 4.3% higher than the same month last year; in fact, they fell by 0.3%. Meanwhile, imports dropped by 0.7%.
Just like in 2020, the coronavirus is the main reason China’s economic recovery is stuttering. The communist regime has committed to a strict “zero COVID” policy, imposing harsh lockdowns any time a new outbreak happens. That made global news last week when thousands of workers fled from the Foxconn factory in Zhengzhou after authorities isolated them in their dormitories. The Zhengzhou plant produces around 80% of all iPhones, and the crisis there could cause shortages of the phones over the lucrative holiday season. Chinese citizens are becoming increasingly frustrated with the uncompromising policy, but the regime insists it’s working and is only willing to make minor changes.
Yet, local lockdowns are constantly disrupting businesses, and now, the country finds itself stuck in a feedback loop. Zero COVID is damaging the economy, but the reliance on lockdowns and travel restrictions mean many Chinese still aren’t vaccinated and have no natural immunity, so changing the policy risks a massive surge in COVID deaths.
Are We at Risk Too?
Will the US economy catch China’s economic woes? There are definitely potential problems on the horizon. Supply disruptions push inflation higher — iPhone prices are likely to surge after the Foxconn lockdown, for example. On the other hand, the US has been running a huge trade deficit with China for years, and a reduction in imports could be advantageous for US manufacturers able to meet the demand for goods China can’t currently supply. In the short term, Beijing’s economic problems will likely make the cost of living crisis a little more painful; in the long run, the communists’ insistence on a zero COVID policy won’t do them any favors.
Thank you to our friends at UnitedVoice for contributing this piece.