China Market Intelligence

US-China bilateral trade in goods saw a sharp contraction during the first half of 2023 after reaching a record high the year prior. The contraction in bilateral trade occurred amid a broader, albeit more modest, contraction in US-worldwide trade in goods, stemming from global and domestic economic woes that have led the WTO, IMF, and World Bank to forecast slower growth for global trade in 2023.

In 2020, the Chinese government sought to rein in real estate developers’ high debt levels with the introduction of the “three red lines,” which imposed borrowing limits on real estate firms. While the move was meant to stabilize the industry, developers and local governments alike have been under financial pressure as developers face declining property sales and local governments see decreasing revenue from land sales.

On August 20, it was reported China had formally established the Central Science and Technology Commission (CSTC) and that the commission hosted its inaugural meeting. The CSTC was created as part of the Party and Government Reform Plan, the principal deliverable at the National People’s Congress held in March.

On August 9, the Biden administration released its long-expected executive order (EO) on outbound investment, along with an Advance Notice of Proposed Rulemaking (ANPRM) from the Treasury Department. While the EO is narrower than other proposals seen in recent years, it still represents a significant change in US policy.

In recent months, China has seen significant high-level personnel changes at both central and provincial levels. On July 25, the National People’s Congress Standing Committee voted to remove Qin Gang from the post of foreign minister and reappoint his predecessor Wang Yi, current director of the CCP Central Foreign Affairs Office.

On March 16, the CCP Central Committee and the State Council released a reform plan for Party and state institutions as part of the annual Two Sessions conference. The plan calls for the creation of a new data regulator, which this article refers to as the National Data Bureau, to consolidate the management of China’s burgeoning data markets.

Following the release of China’s weak second quarter economic data, the government unleashed a slew of measures and statements in support of spurring economic growth, though falling short of issuing a large-scale stimulus package. China continues to face weakening domestic demand, waning private sector confidence, rising youth unemployment, a beleaguered property sector, and mounting local government debt.

China’s second quarter economic data indicates continued weak spots in the country’s economy. While China’s GDP grew by 6.3 percent year on year, it grew only 0.8 percent compared to the previous quarter.

On June 29, the State Council released a slew of new measures intending to simplify cross-border business and expand market access within six of China’s 21 free trade zones (FTZs): Beijing, Shanghai, Guangdong, Tianjin, Fujian, and Hainan. The measures come at a time when Chinese leaders are determined to revive both the domestic economy and investor confidence.

Bipartisanship is uncommon on Capitol Hill, but policymakers across party lines agree on investing in and regulating artificial intelligence (AI). This wake-up call has been driven, in-part, by a perception that China’s accelerated efforts to both develop its AI capabilities and regulate AI technologies will give the country an advantage in the foundational technologies that the United States and China are racing to lead.