New Stage in China's Development amid the Trade War with the U.S.

DOI: 10.20542/0131-2227-2019-63-2-56-65

V. Mikheev (,
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow 117997, Russian Federation;
Plekhanov Russian University of Economics, 36, Stremyannyi Per., Moscow, 115054, Russian Federation;
S. Lukonin (,
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow 117997, Russian Federation

Abstract. By the middle of 2018, there are signs of China’s entry into a new period of development, characterized by alteration of the old model “market reforms – intraparty democratization – moderate foreign policy” to another: “market reforms – Xi Jinping personality cult – offensive foreign policy”. The latter contains a risk of the arising contradiction between economic freedom and political-ideological rigidity, which can lead to destabilization of political life. However, in the light of the current positive economic dynamics, such risk may rather come out in the mid-and long-term perspective. Today, the political situation in China remains stable – despite growing dissatisfaction in scientific, expert and educational circles – due to a tightened control over the intellectual sphere by the government. The need for a new redistribution of power between central and provincial authorities could potentially disrupt political stability in the medium term, but, at the moment, is not a critical negative factor. The economic situation is positive-stable. Forecasts indicate a possible increase of China’s GDP in 2018 by 6.5%. At the same time, there are negative expectations in connection with the Sino-U.S. and potentially Sino-European “trade war”. In its foreign policy, as a response to Western pressure, China progressively uses the Russian direction of its diplomacy in the expanded version of “Russia + SCO”. The nuance here is seen in China’s adjusted approach to the SCO: first of all, not as a mechanism for cooperation with Russia, but as an organization that allows using Russia’s potential for pressure on the U.S. in the Sino-U.S. strategic rivalry. In the second half of 2018, the Chinese economy will continue to develop steadily, albeit with unresolved traditional problems (debts of provinces and state enterprises, ineffective state sector, risks on the financial and real estate markets). In politics, discontent with the cult of Xi will accumulate, but without real threats to his power. Weakening in economic opposition between China and the United States is possible due to Beijing’s search for compromises on tariffs, intellectual property, trade deficit. To find such trade-offs, Xi Jinping will use a so-called “personal diplomacy” of direct contacts with Donald Trump.

Keywords: world economy, China, USA, “trade wars”, foreign policy 


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For citation:
Mikheev V., Lukonin S. New Stage in China's Development amid the Trade War with the U.S.. World Eonomy and International Relations, 2019, vol. 63, no. 2, pp. 56-65.

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