Despite the setbacks of the zero Covid years and the failure of the expected post-Covid recovery, there are still bright spots in China’s future. The growth of renewable energy and electric vehicles is expected to continue, with Chinese EVs capturing a quarter of European sales this year. However, concerns persist about the slowdown in China and the possibility of never escaping the middle-income trap.
When Foreign Secretary James Cleverly mentioned at the Conservative Party Conference last year that China’s slowing growth was leading it back to the negotiating table, there was skepticism. However, recent events seem to indicate that this may indeed be the case. President Xi’s visit to meet President Biden in San Francisco and their subsequent two-hour phone call have been interpreted as China’s move towards caution to ease external pressure on its economy. This is evident in Xi’s complaints about America’s sanctions hindering China’s progress in key technological areas such as semiconductors, AI, and renewables, as well as his objections to US support for Taiwan and the issue of TikTok.
As a result, there have been signs of a shift in China’s stance, with a decrease in aggressive rhetoric from Chinese officials and renewed dialogue between the Chinese and American militaries. These developments could indicate a move towards a more conciliatory approach by China to address its economic challenges and global pressures.
