China’s Economic Influence: A Growing Power in 2022

20th November 2022

China’s economy continues to shape global markets. What role will it play in the future, especially amidst tensions with the West and ongoing trade disputes? This article analyses China’s economic trajectory.

As the world hurtles towards an uncertain future, few nations have captured as much attention and concern as China. In 2022, the dragon is not merely awake—it is poised, fangs bared, at the centre of global economics, politics, and trade. The Middle Kingdom’s rise has been nothing short of extraordinary. Over the past few decades, China has transformed from a largely agrarian society into a dominant force in the global market, challenging even the most powerful economies in the world. As we enter 2023, the question on many minds is: What role will China play in shaping the economic landscape, and what challenges will it face in doing so?

One thing is certain: China’s economic influence is undeniable. In 2022, the Chinese economy continues to grow at a robust pace, although the rate of growth has begun to slow slightly. This slowdown is part of a broader transition from an investment-driven, export-led economy to a more consumption-based and service-oriented model. China’s government has long sought to transition from being the world’s factory to being a global consumer powerhouse. The shift is essential for China’s future growth, as it moves from being the workshop of the world to the centre of a thriving internal market, with an increasingly affluent and urbanised population driving demand for goods and services.

However, this transition is not without its challenges. While China’s domestic market is growing, its external relationships remain complex and fraught with tension. One of the central factors in shaping China’s economic trajectory in 2022 is its relationship with the West, particularly the United States. After the trade war that began in 2018, the economic rivalry between China and the West has become even more pronounced. In 2022, the Trump-era tariffs continue to loom large, and China is faced with the challenge of navigating a global trade environment that is increasingly protectionist.

In many ways, the trade disputes between China and the United States resemble a chess match between two grandmasters—each move carefully considered, each countermove anticipated. For China, the stakes are high. It is the world’s largest exporter and the second-largest economy, but it is also highly reliant on foreign trade to sustain its growth. The tariffs imposed by the US have undoubtedly had an impact on Chinese businesses, and the question remains whether China can continue to grow its economy while the US seeks to decouple its supply chains from China. As the trade war continues to simmer, China must look to diversify its trading partners, fostering stronger ties with other regions, including Europe, Africa, and Asia.

One of China’s key strategies in this regard has been the Belt and Road Initiative (BRI), a sprawling infrastructure project designed to connect China with the rest of the world through a network of railways, roads, and ports. Launched in 2013, the BRI has become one of China’s signature economic initiatives, and by 2022, it has expanded to include over 140 countries. For China, the BRI is not merely an infrastructure project—it is an economic and political tool designed to solidify its influence across the globe. The initiative offers an opportunity for China to extend its economic reach, especially in developing countries, by providing much-needed infrastructure investments.

Yet, the BRI also has its critics. Some argue that the initiative is a veiled attempt by China to assert its geopolitical dominance by indebting participating countries to China. There is also concern about the environmental and social impact of some BRI projects, particularly in Africa and Southeast Asia. Nevertheless, the BRI remains an essential part of China’s long-term economic strategy, and its success or failure will play a significant role in determining China’s economic trajectory in 2023 and beyond.

Internally, China faces a number of significant economic challenges that could slow its growth in the coming years. One of the most pressing issues is the country’s aging population. Like many developed nations, China is experiencing a demographic shift, with a growing number of elderly citizens and a shrinking workforce. This demographic trend threatens to undermine China’s economic growth, as the country will need to support an increasingly large retired population while dealing with a shrinking pool of workers. To address this issue, China is seeking to increase its focus on automation and artificial intelligence (AI), investing heavily in technology to maintain productivity despite a declining labour force.

Moreover, China’s property sector—long a pillar of the country’s economic expansion—is also facing significant challenges. In recent years, skyrocketing property prices and the growing debt of real estate developers have raised concerns about the sustainability of the housing market. In 2022, the Chinese government is grappling with the fallout from the debt crisis of one of the country’s largest property developers, Evergrande. The company’s struggles have sent shockwaves through global financial markets, raising fears about the potential for a broader economic slowdown in China. The government’s response to the crisis will be crucial in determining whether the property sector can stabilise or whether it will drag down China’s economy.

Despite these internal and external challenges, China’s economic growth prospects for 2022 remain relatively strong. The country’s manufacturing sector continues to be a global powerhouse, and it remains the world’s largest exporter of goods. Additionally, China has emerged as a leader in several key industries, including renewable energy, electric vehicles, and telecommunications. As the world transitions to a more sustainable future, China’s investments in green technologies will position it as a key player in the global green economy.

As China navigates these complex economic and political challenges, the role of its leadership is also critical. President Xi Jinping has consolidated power over the past decade, and his vision for China’s future is ambitious. In 2022, Xi’s government has been focused on several key priorities, including advancing technological innovation, reducing poverty, and achieving “common prosperity.” However, Xi’s leadership has also been marked by a more assertive foreign policy and a crackdown on domestic dissent, both of which have raised concerns among Western policymakers. Whether Xi can maintain China’s economic momentum while managing these internal and external pressures will be a key question in the coming years.

In literature, the struggle between individual ambition and the collective good is a recurring theme. One could turn to the works of John Stuart Mill, who in On Liberty argued that individuals should be free to pursue their own interests, provided they do not harm others. This tension between the individual and the collective can be seen in China’s economic rise. On the one hand, China’s economic success has been driven by the individual ambition of its entrepreneurs, who have seized the opportunities presented by a market-driven economy. On the other hand, China’s government plays a crucial role in shaping the economic landscape, ensuring that the country’s growth aligns with its broader political and strategic goals. As China’s economy continues to grow, the balance between these two forces will be key in determining its future.

Similarly, the works of Joseph Conrad, particularly Heart of Darkness, can serve as a metaphor for China’s expanding influence on the global stage. Just as Conrad’s protagonist, Marlow, navigates the complex and morally ambiguous terrain of the Congo, China is navigating the complexities of global power in a rapidly changing world. With its growing economic influence, China faces the challenge of balancing its desire for dominance with the need to maintain relationships with its neighbours and the wider world. As in Heart of Darkness, China must grapple with the moral and ethical implications of its actions as it seeks to extend its reach.

In conclusion, China’s economic trajectory in 2023 will be shaped by a combination of internal reforms, external challenges, and geopolitical ambitions. While the country faces significant obstacles, its economic influence is only set to grow. The question is not whether China will continue to rise, but rather how it will manage the complexities of this growth and navigate the shifting global order. Whether through the Belt and Road Initiative, technological innovation, or its leadership’s vision, China’s role in the global economy is set to become even more significant in the years to come. As the world watches, China’s economic rise is a force to be reckoned with—one that will shape the future of global trade, finance, and politics.