China plays an important role in the global economy. The Financial Times recently reported that China's exports of goods have fallen due to overcapacity, which has raised concerns about the global economic outlook.
China's low-cost products have been one of the world's leading features for the past few decades.
China's exports face significant challenges due to factors such as a weak real estate market, weakening domestic demand and a weak renminbi. The decline in export goods** has been impressive, the fastest since 2008. This shows that China is exporting deflation to the world.
In addition to the problem of export deflation, lower prices for export goods will also exacerbate dissatisfaction with unfair competition in Western manufacturing.
For example, BYD, China's largest automaker, recently announced a 5% to 15% price reduction for electric vehicles in Germany**; Germany's Mercedes-Benz said last year that its profits had been hit by a "brutal" war in the electric vehicle market. All of this shows that the competitiveness of China's cheap products threatens the manufacturing of other countries.
Faced with this situation, many economists believe that China's deflation could have a big impact on emerging markets.
Therefore, countries** need to take appropriate measures to address this issue. Some countries have chosen to reduce their dependence on China or de-risk, while others have chosen to continue to buy cheap products from China. However, this choice may not be easy for countries that rely on Chinese-made products**.
The current state of China's economy is worrying.
Overcapacity and declining exports** have affected not only the domestic economy but also the global economy. Countries** need to pay close attention and develop policies to address this challenge. At the same time, it is also necessary to strengthen international cooperation to jointly promote the stability and prosperity of the global economy.