China’s share of global economic power will hit 18% in the year 2030, matching the might of the American economy in the 1970s and Great Britain’s a century before that. That’s the forecast of Arvind Subramanian of the Peterson Institute for International Economics. In 2030, Subramanian predicts China will hold 18% of the world’s economy, the US 10.1% and India 6.3%. If those figures are right, then China is going to take over the US as the world’s economic superpower way before 2030 — not an inconceivable thought at the rate American politicians are pushing China to revalue the yuan while their own economy remains in the doldrums.
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Despite repeated calls by heads of government to fend off protectionism and ensure the free flow of global trade, companies with operations on foreign soil may find themselves in a new situation, where protectionism no longer manifests itself in terms of tariffs, but in subsidies, local content requirements and capital controls.
A chief editor from Economist Magazine even commented that policymakers have become choosier about whom they trade with, how much access they grant foreign investors and banks and what sort of capital they admit. Sadly, that is still part of picture; for Chinese companies, the biggest challenges facing their foreign operations might be the murky politics that threaten to shut them out of the local market. Chinese companies like Huawei and Sanyi have found the US market impenetrable, as the US federal government shut them out, citing national security concerns.
In what way are these new forms of protectionism affecting global trade? How can we deal with them?
Ni Hao, you’re listening to People In the Know, bringing you insights into the headlines in China, and around the World; I’m Zheng Chenguang in Beijing.
We speak to Professor Simon J. Evenett, Academic Director of the MBA Programme at the University of St. Gallen in Switzerland, Prof. Michael R. Czinkota from the McDonough School of Business at Georgetown University in Washington, DC, and He Weiwen, Co-Director of the China/US-EU Study Center at the China Association of International Trade.