The Evergrande crisis and the energy crisis worsened the economic situation in China
Since 2008, China has witnessed declines in its economic performance, although it is still the second largest economy in the world, after America, as well as its leadership of a project for a new global economic order that ends the control of America and the dollar.
For a while now, the economic news coming from China is no longer based on cheap goods or high growth rates. Rather, the wind comes in what ships do not desire. China is experiencing an energy crisis that has affected the provision of electricity to factories and homes, which called for reducing electricity in homes, as well as reducing energy For energy-intensive industries such as steel, cement, fertilizer, etc.
Some industries that depended on production requirements or equipment and machines coming from China have become in a difficult situation, causing them to re-calculate from more than one side. The first is the issue of regular production, the second is the search for other sources, and the third is the rise in production costs.
It is worth noting that Chinese merchandise exports amounted to about 2.5 trillion dollars at the end of 2020, equivalent to 14.2% of the total global merchandise exports, which amounted to 17.6 trillion dollars, while its merchandise imports in the same year amounted to 2.05 trillion dollars, equivalent to 11.5% of total imports. The global commodity, which amounted to 17.8 trillion dollars, according to the figures of the World Bank database.
The crisis of the largest real estate company in the world, "Evergrand", represents one of the expected threats to the global financial system. News of the decline in its financial position and its liquidity crisis led to declines in the international financial markets.
The economic situation that China is going through makes us think about the fate of this economic giant, the consequences of its economic crises, and who will benefit from those crises and who will be harmed.
The crisis of lack of transparency
Before the Corona pandemic crisis, China was suffering from a debt crisis in its local companies, as well as from high rates of environmental pollution, and expectations were that a pent-up crisis within the Chinese economy would explode the financial situation at the local level, but the Chinese processors, through its reserves of points. The foreign debt, which exceeds $3.4 trillion, allowed it to have some kind of control over the crisis, and what helped it control the debt crisis of domestic companies was the government's complete control over the banking system.
But with the advent of the Corona crisis, the problem of lack of transparency does not concern China alone, but the whole world needs more information about this virus to confront it, as it led to a complete closure of the global economy that lasted for a few months, then comes the crisis of the largest real estate company in China, “Evergrand.” Its capital amounts to about $300 billion, which casts a negative shadow on the internal situation of the Chinese economy, and raises concerns about its repercussions on the global economy.
Then finally, the Chinese government directed its citizens to stockpile foodstuffs to face an emergency, which may be imposed soon; To leave the world in front of several speculations, the most prominent of which was the possibility of a new type of corona outbreak within a number of Chinese provinces, which heralds the possibility of a return to the closure of the global economy again.
Perhaps the state of the US-Chinese conflict imposes itself in the field of information disclosure, so that it does not employ the weaknesses in the Chinese financial and economic crises against it, and weakens its position on the map of global economic powers, but as long as China accepts to be one of the main actors in the economies of globalization, it must disclose what It has problems, so that everyone can take health and economic measures to prevent the negative repercussions
Crisis and opportunity
The saying “every crisis must create an opportunity” is attributed to the Chinese literature, and that they usually deal with crises from a positive perspective, but if we accept the results of this saying, it also applies to the rest of the participants in the global economic system. The three decades (1990-2010) were at the expense of other economic powers in Asia and Europe, and China's declines will undoubtedly be in the interest of other economies.
This does not mean the end of the era of China as a major productive and economic power, but it does mean a decline in its share, while remaining on the map of the prominent economic powers at the global level, and the new reality of China requires thinking about monitoring some opportunities for others from China's economic crises.
Those affected by the crisis
Those affected by China's economic crises are those major stores in various countries of the world, which relied on the continuous flow of cheap goods from China, and built their trade policy on this situation. In many capitals of the world, you find stores that sell everything from China at distinct prices.
As well as industries that relied on Chinese production lines, or production requirements, and the lack of diversity in their sources of supply, and limiting them to one technology. The alternative for these industries is to go to European countries or Asian countries that can replace Chinese technology, but this alternative will be more expensive, and that This means the weak competition of the products of these industries at the local and international levels.
Among the damages that could be inflicted on other developing countries is the exit of industries that pollute the environment and are energy-intensive from China to those countries, which is a repetition of the same scenario in Europe in the early nineties of the 20th century, as it worked to transfer these industries outside their geographical scope, and contented themselves with importing them from developing countries and from Among them is China.
epa05017649 A general view of containers and a ship at the Port of Qingdao, eastern China's Shandong province, China, 09 November 2015. China's foreign trade dropped 9 per cent year on year in October in the eighth consecutive month of decline, official figures showed 08 November. Exports were down 3.6 per cent and imports plunged 16 per cent in October. EPA/STRINGERThe major stores in the world are one of those affected by the crises in China, as they depended on the continuous flow of cheap (European) goods.
The beneficiaries of the crisis
As we said earlier, the crisis creates an opportunity, and the first beneficiaries of China’s crises are the countries producing raw materials. The prices of these materials rose in the first months of 2021, and this rise is expected to continue for a medium term, i.e. within 3-5 years, which may compensate Countries producing raw materials for what they have suffered in the past few years.
Perhaps energy prices are the best proof of this, as all types of primary energy sources are witnessing an increase in their prices in the international market, oil, gas and coal, which will revive the shale fuel industry from oil and gas, and undoubtedly this matter will put pressure on workers in the field of alternative energy, to focus their investments and research To produce alternative energy in quantities and prices that can mitigate the rise in conventional energy prices, as estimates indicate that the price of a barrel of oil will reach $100.
Among the beneficiaries of China's crises are also those countries that have strong production bases, they can get a share of Chinese production, which is expected to decline in the next stage, and they can also be in a position not to go through the problems that China has experienced, so that importers guarantee at the level The global continuation of the flow of goods at a quality and price that allow competition, and do not lead to inflationary waves.
Among the beneficiaries of these crises are local manufacturers who were unable to compete with Chinese products, as it may give them the opportunity to restore their position and operate their factories, provided they develop their performance and maximize their benefit from the opportunity. and contribute to creating new job opportunities.
Turkey opportunity
It is noted that Turkey over the past years has been able to achieve remarkable progress in its merchandise exports, despite the global economic crises, as well as problems related to the devaluation of its currency and high inflation rates. Turkey's merchandise exports have exceeded the $200 billion ceiling.
But the real opportunity for Turkey is not in increasing commodity exports, but rather it has to develop its performance so that high-tech commodities are at the forefront of its commodity exports. The world, in light of China's current crises, suffers from a lack of technological segments used in the automobile industry, which has led to an increase in their prices.
Hence, Turkey has to be an alternative that meets the international requirements of high-tech goods, and there is no objection to its continuation of its production of traditional goods for two reasons: the market’s continued need for these goods on the one hand, and the second hand absorbing the labor force that was suffering from unemployment in the past period, as it reached The unemployment rate there is about 12.1% by the end of August 2021.
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