The January edition of the Global Neighbours Breakfast Club focused on China’s economic realities at a time of heightened geopolitical tensions and shifting global trade patterns. With high-level speakers and participants from diplomacy, finance, industry, academia, and international institutions, the session offered in-depth insights into China’s economic dynamics, key structural challenges, and the implications for Europe-China economic relations.
The session was opened and moderated by Dr. Harvey Dzodin, who introduced the objectives of the Breakfast Club and underscored the importance of sustained, fact-based dialogue on China. He emphasized the need to move beyond simplified or politicized narratives and to engage directly with economic realities, particularly in the European policy debate.
Growth under Pressure
As the main speaker, Gene Ma, Head of China Research at the Institute of International Finance (IIF), provided a comprehensive assessment of China’s economic outlook. He structured his remarks around three core themes: short-term cyclical developments in GDP, longer-term structural challenges within the Chinese economy, and China’s evolving trade relations and capital flows. Drawing on recent data, he addressed questions surrounding GDP measurement and highlighted the ongoing housing downturn as a central drag on growth, with spillover effects across construction, local government finances, and broader economic confidence.
Structural Constraints and Long-Term Trends
Beyond cyclical developments, Gene Ma outlined several structural constraints shaping China’s medium- to long-term trajectory. These include demographic pressures from an ageing population, weak labour-market conditions – particularly among younger cohorts – and subdued wage growth. He also highlighted the increasing role of automation and technological upgrading in reshaping industrial employment, alongside persistently low inflation and weak domestic demand. Addressing common narratives, he noted that while household consumption accounts for a relatively low share of GDP, its contribution to overall growth over the past decade has been more significant than often assumed, suggesting that current imbalances are closely linked to housing and investment dynamics rather than consumption alone.
Trade Relations and the Global Dimension
Turning to China’s external economic relations, Gene Ma discussed how global trade patterns have been reconfigured rather than fundamentally disrupted. Despite rising tariffs and trade tensions, China’s export performance has remained resilient, with trade flows increasingly redirected toward other regions. At the same time, widening trade imbalances with the European Union and intensifying competition between Chinese and European industries illustrate the growing complexity of Europe-China economic relations. He emphasized that export-led growth cannot serve as a sustainable long-term strategy and that future rebalancing will require stronger growth in services and domestic demand.
Discussion and Key Takeaways
Following Gene Ma’s remarks, the exchange focused on the sustainability of export-led growth, the implications for Europe-China economic relations, and the broader geopolitical environment. Participants exchanged views on competitiveness, investment flows, and the risks and limits of economic decoupling. A recurring theme was the importance of pragmatic engagement grounded in economic realities, offering valuable perspectives for European policymakers, businesses, and institutions and underscoring once more the central role of informed, fact-based dialogue in an increasingly complex global environment.