China’s slowing economy is poised to redefine its global trade relationships, particularly with the Global South. Assistant professor Ning Leng of Georgetown University’s McCourt School of Public Policy discussed how these internal economic challenges might prompt China to boost investments in regions like Southeast Asia and Latin America.
China’s Economic Shift and Its Global Implications
Ning Leng, assistant professor at Georgetown University’s McCourt School of Public Policy, shared her insights on the “Global Implications of China’s Economic Expansion” during a U.S. Department of State’s foreign press briefing last week.
She addressed the current challenges within China’s economy, outlining how these domestic issues could influence its future global trade and investment approaches, emphasizing the potential realignment of China’s economic partnerships, particularly with nations in Southeast Asia and Latin America. Observing China’s economic slowdown, she stated:
China has reached a critical point where its current economic growth model is losing momentum. This year, China’s economy continues to slow down. Measures of factory output, consumption, and investment all slowed more than expected.
Leng highlighted several global consequences of China’s economic expansion. Firstly, China is anticipated to export its excess capacity in construction materials to regions requiring infrastructure development, especially within the Global South. Additionally, China’s quest for natural resources to sustain its manufacturing, particularly lithium and nickel, will likely intensify, focusing on resource-rich countries. In the agricultural sector, China’s growing need for imports—mainly protein and cereals—due to declining arable land will bolster trade relationships with South America. Furthermore, China’s foreign direct investment is expected to rise, particularly targeting middle-income nations with expanding consumer markets and institutional stability.
On the geopolitical front, Leng pointed to significant effects stemming from China’s economic growth. Chinese enterprises, particularly in industries like electric vehicles, electronics, and renewable energy, will likely pursue international investments, creating potential competition with Western nations. “China will seek stable markets with a robust middle class to sell its products and strengthen its global standing,” Leng remarked. Meanwhile, China’s weakened consumer spending and heavy reliance on exports may prompt shifts in global supply chains, particularly in Southeast Asia, as businesses reassess risks tied to China’s evolving economic landscape.
The assistant professor also underscored how stagnation in China’s real estate sector, which previously contributed about 25% to the country’s GDP, may prompt an increase in exporting overcapacity to regions such as Latin America and Southeast Asia. Additionally, China’s heightened focus on acquiring resources like lithium and nickel will be essential for sustaining its manufacturing sector.
China’s internal economic shifts are driving adjustments in its global perspective, Leng noted, adding: “How China perceives the world is changing due to its own evolving economy.” She opined:
My personal assessment is that the Global South will become increasingly important to China, and that Southeast Asia will remain the most important region to China in the developing world, and Latin America will be increasingly important to be the second important region.
These developments suggest Chinese companies are poised to increase foreign direct investment, especially in sectors like electric vehicles, electronics, and consumer goods, aiming to capture international markets, she concluded.