Despite the challenges, there are still bright spots in China’s present and future, such as renewable energy. Chinese electric vehicles are projected to capture a quarter of European sales this year. March data shows that factory activity is rebounding, and analysts at Citi have upgraded their prediction for the Chinese economy to 5% growth this year. However, these positive developments may not be enough to prevent a concerning slowdown in China. There are concerns that China may never be able to escape the middle income trap, which raises questions about the Communist Party’s mandate to rule.
The extraordinary zero Covid years did not provide much help and the widely-expected post-Covid recovery has not fully materialized yet. Consumer and business confidence in China are currently at an all-time low. Last summer, before the Communist Party stopped publishing the figures, over a fifth of Chinese young people were unemployed. During a business summit held in Shanghai earlier this year, the only bullish investors – Chinese or international – were those with a stake in electric cars. Despite these challenges, there is still hope for China’s future if they can find ways to improve their economic situation and address concerns about their approach to external pressures.
