Geopolitical conflicts may heat up this year, including possible Chinese actions against Taiwan.
Compiled by Yang Fuyi / special translation
Russia was sanctioned by the West for its aggression against Ukraine, which led to energy shortages, and European and American countries accelerated their shift to renewable energy.
From the global central bank's aggressive interest rate hikes to curb inflation, Russia's invasion of Ukraine and the energy crisis in many countries, to the volcanic eruption of the epidemic in China, epoch-making turmoil will run through 2022; whether 2023 can get out of the tunnel and usher in a booming economy Dawn?
There are five aspects that are particularly worthy of further observation, including: the central bank’s continued interest rate hikes impacting the economy, China’s economic recovery after the epidemic, the Ukrainian-Russian war accelerating energy transition, US-China technological competition and export controls, geopolitical tensions and international alliances.
In 2023, the Biden administration's control over China's technology exports may be further expanded.
(European News Agency)
1. Economic and interest rate policy
The Chinese economy faces multiple challenges that are becoming increasingly apparent, so it is unlikely that the Chinese economy will surpass the United States in size.
Experts from the Center for Strategic and International Studies (CSIS), a Washington think tank, assessed the outlook for 2023 and pointed out that inflation is expected to persist, global economic growth may slow, and the economic revitalization effect brought about by the loosening of COVID-19 epidemic prevention measures may be slow. The government will not introduce large-scale stimulus measures, and the world's major central banks are bound to continue to tighten policies to fight inflation.
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Economists predict that the end point of the Fed's rate hike cycle will be 5%, which may last until the first quarter of 2024.
The outside world is particularly concerned about the US Federal Reserve (Fed) successfully guiding the economy to a "soft landing", otherwise it may face the haze of an economic recession in the third quarter of this year.
Bloomberg economists predict that the Fed's rate hike cycle will end at 5%, which may remain until the first quarter of 2024; is a short time.
The European Central Bank (ECB) needs to strike a balance between the fiscal restructuring of the Eurozone government and the high private energy costs. CSIS economic experts believe that the ECB will not continue to raise interest rates as much as the Fed.
2. China's post-pandemic economy
After the Chinese government's three-year strict zero-clearing policy came to an abrupt end, Beijing turned to the search for economic stability.
Although financial experts are optimistic that China's economic restart after waves of widespread Covid infections will stimulate consumption, the real estate industry may also stabilize under the support measures of the Chinese authorities; however, China's exports are unlikely to contribute too much to its economic growth. Much support, mainly due to weak demand elsewhere in the world.
The Economist magazine estimates that India's population is expected to surpass China's in April this year, reaching 1.43 billion people.
As China's economy faces increasingly significant challenges, including the cost of epidemic prevention, the US-China technology war, weak real estate sales, population decline, and debt crisis, more and more economists believe that China's economy may only rank second in size. The day when it surpasses the United States may never come.
3. Ukrainian-Russian war accelerated energy transition
"The Economist" pointed out that the development of the war in Ukraine in the next few months will affect the performance of energy prices, inflation, interest rates, economic growth and food shortages.
A swift Ukrainian counteroffensive could threaten Putin, but the most likely scenario seems to be a stalemate between the two sides.
Russia may be trying to delay, hoping to weaken Western support for Ukraine through energy shortages and political changes in the United States.
Western sanctions on Russia, an energy powerhouse, and record coal prices have led to a surge in electricity prices, accelerating the shift to renewable energy sources in Europe and the United States, including wind, solar, nuclear and hydrogen.
In addition, the "Reducing Inflation Act" passed by the United States promotes investment in domestic clean energy, and it is generally expected that investment in global climate mitigation and adaptation will increase in 2023.
4. U.S.-China technology and infrastructure competition
CSIS experts believe that as the strategic competition between the United States and China continues to intensify, the Biden administration may further expand technology export controls in 2023, mainly focusing on protecting and improving the key technologies of the United States itself, especially in American technologies that have been regarded as national security. Leading in fundamental fields, including microelectronics systems, artificial intelligence, biotechnology and biomanufacturing, quantum computing, advanced clean energy, and climate adaptation technologies; Washington may use these industrial sectors as "strategic throats" to choke China's development of semiconductors and military Ability to use technology.
In addition, global infrastructure will remain a core element of the Biden administration's foreign policy in 2023, including the "Global Infrastructure and Investment Partnership Program" (PGII) proposed by the seven industrialized countries (G7); the "Indo-Pacific Economic Architecture"; The continuation of the "Blue Dot Network" program during the Trump administration; the "Triple Country Infrastructure Investment Partnership Program" of the United States, Japan, and Australia; and the "Quadruple Security Dialogue" (Quad) formed by the United States, Japan, India, and Australia.
These Western initiatives are competing with China's "Belt and Road" and setting the standard for high-quality infrastructure.
5. Geopolitical Tensions and International Alignments
"The Economist" predicts that geopolitical conflicts may heat up this year, including China may take the opportunity to take action against Taiwan, tensions between India and China may erupt, and disputes between Turkey and Greece over the Aegean Islands.
International alignments have also shifted as geopolitical tensions have risen.
According to the analysis of financial experts, the two camps of “democracy vs. authoritarianism” are becoming more and more nationally aligned, confronting each other in economics, trade, military affairs, regional security, and ideology. This may create a source of uncertainty for the financial market.
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