Name: Trump bullying, Chinese growth drives the West into China’s arms | DW News
Uploaded: 2026-01-20T17:33:37.000Z
Duration: 20 min 38 s
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China has literally substituted everything Europe is good at, whether it's chemicals, whether it's autos.

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So China knows it needs to keep a little bit of that growth because what is coming is not very positive.

The real estate sector is still actually doing even worse.

What is really pushing China to grow at that level is the rest of the world.

So it was no big surprise when China met its official 5% economic growth target for last growth was boosted by a record trade surplus.

So China's relative economic strength combined with US President Donald Trump's tariff policies and threats to invade Greenland are making China more attractive for countries seeking non U S trade options.

To take a closer look at China's economy and the changing face of global trade, let's talk to Alicia Garcia Herrero.

She's chief economist for Asia Pacific at the French bank Natixis.

Thanks for taking time to talk to us today.

It's no big surprise, as I said, that China met this growth target.

But how would you interpret these figures?

Well, we first need to realize that the fourth quarter was actually lower than the average 5%.

October, November, December have been much weaker.

But I think beyond that, meaning the trend is really not upward.

I'm sure that the next target will be 5%, if not short, close to sure.

They probably even, frankly, I think they probably tweeted a little bit, tweaked the numbers so that they could keep a little bit for the first quarter because it's five sharp, you know, so we can tell that fixed asset investment was quite low.

We can see that sentiment is not improving.

Fixed asset investment in real estate is at minus 16, at the tune of, you know, minus 16.

How can you even imagine any recovery there?

What is really pushing China is to grow at that level is the rest of the world.

And you know, when you know your growth depends on the rest of the world, it's not very comfortable, is it?

This is the exact opposite of self reliance, isn't it?

So on top of that, a very important point is that China continues to export this trillion US dollar, wonderful figure, but

That is making less and less money, both because corporate profits we can see are growing negatively Industrial profits are negative, you know, overall I would say flat.

But also because wages, and we have data, actually

we have data out today on disposable income are actually growing below the economic growth at around 4% for disposable income is very low.

Because both profits but also wages, real actual wages, meaning what people actually get, not the nominal wages, what is announced are coming down.

So you know when people say, oh, China does not want to grow out of domestic demand.

Cannot grow out of domestic demand because there is no profitability.

It's what I call profitless growth model.

I'm not saying the rest of the world is any better.

It's not about comparing because of course if you compare, you can see, well, you know, China is still doing well, but, but

generally I say it's a very risky growth model.

Not profits and depending on the rest of the world, that's what it is.

And this differential then between you know, with wages and growth means also has implications for things like retail sales.

And I'm trying to boost any kind of domestic demand.

That is why we are again at very low levels of retail sales.

So you know, you know that people are reluctant to buy even if prices are falling.

Some economists argue, yeah, it's like you wait to buy.

I would say China is not yet there in that kind of deflation spiral.

On the consumer side, consumers do not want to buy whatever is durable, durable consume.

Consumer staples, so you know, food, all of that is fine.

It's just the reason for this is that they are not sure their income will continue to grow.

So they only buy what is necessary, what is needed, any long term purchase, whether it's an investment that is housing or a car, a durable good.

They need massive subsidies which have been coming along, no more.

Because the local governments don't have the resources to continue to subsidize.

So you know, it's a model in itself that again, we all have problems.

I'm not saying this is, you know, the end of the world, but

Whoever thinks okay, 5% growth, you know, cheap, kind of easy, easy peasy no, it's not.

China has a lot of issues behind that 5% number.

So it's kind of a, it's quite a precarious figure.

And, and it's a picture of a sort of a precarious economic growth that you're painting.

On the other hand, it's one that the rest of the world is suddenly looking at with licking its lips because of the situation in a way that, that they've, that many countries have been put into.

One of the countries that's by, by President Trump and his tariff policies and also things like the threats to invade Greenland.

There's a lot of issues that many Western countries now have in particular with, with Donald Trump.

So we've just seen Canada's Prime Minister, Mark Carney secure what he described as a preliminary but landmark trade.

How significant is Canada's reset of relations with China, do you think, in terms of countries looking to China as a savior?

It is very significant because it's not only Canada.

We have the UK and frankly speaking, we just had guidelines to substitute what I would call hard earned tariffs on EVs.

Because it took a while for the European Union to set up those tariffs.

We are now thinking of basically substituting them with minimum price undertaking, which basically means that the Chinese EV makers get basically the tariff meaning as a profit and the consumer in Europe will pay for that.

This is not very good news for the consumer.

Because Europe sees the threat of Trump 10% additional tariffs because of Greenland.

You know, China is not really about the Chinese market.

Maybe more for Canada because Canada is a commodity exporter.

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Trump bullying, Chinese growth drives the West into China’s arms | DW News

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