China and its rival superpowers face tough years ahead as decades-old drivers of growth worldwide lose steam, the tailwinds promised by artificial intelligence prove more illusory than real and uncertainties multiply amid geopolitical conflagrations involving nuclear-armed adversaries. Those difficulties add to deep-seated challenges that are kindling societal discontent.
The ageing population is one. This global demographic challenge will further slow economies after tepid growth as governments strain to provide healthcare and consumer demand weakens. In China, roughly 28 per cent of its total population will be aged 60 and over by 2040. Globally, that share will be approaching 20 per cent and growing. Longevity and low birth rates are why.
Nations will continue moving away from multilateral institutions to embrace bilateral and regional transactions. In doing so, they will replicate the economic nationalism spearheaded by US president-elect Donald Trump.
In trade wars, more is lost than won. The investment bank Goldman Sachs forecasts that an increase of 20 percentage points in the effective tariff rate imposed by the incoming Trump administration on Chinese goods will cut China’s real gross domestic product by 0.7 percentage points in 2025.
Is there a game of chicken ahead? Will retaliation follow Trump’s first moves on trade? Will Beijing’s stimulus offset the impact of US tariffs and stanch emerging public unrest? These questions will hound the year ahead.
Sovereign debt will reach new highs. The consequences will overtake central banks’ actions as the determinant of interest rates. According to Statista, China’s national debt is projected to increase by US$10.6 trillion between 2024 and 2029, reaching a total of US$27.2 trillion. Global public debt is likely to exceed US$100 trillion, or about 93 per cent of global GDP by year-end. It could approach 100 per cent of GDP by 2030, according to the International Monetary Fund.