China, a key member of the BRICS economic alliance, is experiencing a welcome surge in exports in 2024, offering a much-needed boost to its domestic economy. Outbound shipments saw a significant 6% year-on-year increase in April and May, with May alone showing a 1.5% growth compared to April. This positive trend comes at a crucial time as China navigates internal economic hurdles.
The latest data paints a picture of a $18.6 trillion economy growing at a variable pace. The first quarter exceeded expectations, expanding by a healthy 5.3% year-on-year after a shift in policy measures. The rising export figures suggest an improvement in demand for Chinese goods, potentially fueled by a global increase in consumption. However, potential trade wars with the US and Europe threaten to disrupt this growth trajectory.
The looming specter of export tariffs from these major economies puts China in a precarious position. Tariffs could significantly curtail China’s export boom, leading to a potential slump. Additionally, the fallout from the Evergrande crisis continues to cast a shadow, with the real estate sector remaining a major stumbling block for China’s economic stability.
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Despite these challenges, analysts remain optimistic about China’s export performance. Julian Evans-Pritchard, Head of China Economics at Capital Economics, believes the global demand for Chinese goods outweighs the potential impact of tariffs.
“Global demand is giving a bigger boost to China’s economy than we had anticipated this year,” Evans-Pritchard told Reuters. “Foreign tariffs will make little difference to aggregate export performance in the near term.”
This optimistic outlook suggests China’s growth could reach 5.5% this year, potentially strengthening the BRICS alliance as a whole. With a robust Chinese economy at the forefront, BRICS could potentially solidify its position as a leading exporter to developing countries. This strategic move could pave the way for the alliance to advocate for settlements in local currencies, potentially diminishing the dominance of the US dollar in international trade.
However, the long-term impact of potential trade wars and the ongoing domestic economic challenges remain to be seen. Only time will tell if China’s export boom can be sustained and whether it can propel BRICS towards a new era of economic influence.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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