Several fundamental shifts influence China's trade relations with developed countries:
Ascension in the value chain: Developed countries are less willing to absorb Chinese exports in high-value, technologically complex sectors like cars and aviation, compared to traditional sectors like textiles.
Weakening trade reciprocity: China's demand has softened post-COVID, while its exports remain robust due to supply-side stimulus, leading developed countries to perceive a worsening trade deal.
Collapse of political liberalization bargain: The implicit agreement of economic exchange for political liberalization is no longer believed, removing the political justification for powering China's economic and technological growth through Western markets.
European concerns: Europe fears deindustrialization of its auto industry, a crucial economic backbone, exacerbated by high energy prices and wages, leading to potential trade conflicts with China.
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Transcript
Episode notes
In this episode of Pekingology, Freeman Chair in China Studies Jude Blanchette,is joined by Yanmei Xie, Geopolitics Analyst with Gavekal Research, who has recently been publishing articles at Gavekal and the Financial Times. Today, Jude and Yanmei discuss her recent client notes on Chinese overcapacity and its EV sector.
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