China
Can China Steer the Global Energy Transition?
China’s economy faces challenges, prompting government actions to boost demand while addressing concerns over Trump’s re-election and potential tariffs. Three policy responses include increased stimulus, free trade maintenance, or a Global South Green Development Plan.
Economic Challenges in China
China’s economy is facing both cyclical and structural pressures that have led to a slowdown in growth. In response, the Chinese government initiated measures at the end of September 2024 aimed at boosting aggregate demand while promoting ‘quality productive forces’ to foster new growth drivers. These actions are crucial for revitalizing the economy amid increasing challenges.
The Impact of U.S. Politics
The re-election of Donald Trump has introduced additional uncertainty into China’s economic landscape, particularly with Trump’s campaign pledging potential tariffs of 60% on Chinese goods and threats of further decoupling. This situation prompts China to consider strategic responses to navigate these economic headwinds, as external shocks loom on the horizon.
Strategic Policy Options
China has several policy options to address these challenges. A widely supported approach is to enhance policy stimulus to boost domestic demand. Alternatively, some advocate for maintaining a free trade stance rather than retaliating against protectionist measures. Lastly, I propose the ‘Global South Green Development Plan’ to assist in the energy transition in developing nations, thereby stabilizing China’s economy while combating climate change.
