China's role in the global economy continues to grow as a result of the hegemonic shift, a change in the world order that occurs only once every hundred years (see chart). With its military, economic and technological power, China ticks all the boxes for an emerging hegemon. 

Despite recent challenges, China's role in the global economy continues to expand. Key avenues for growth include rebalancing investment toward high-tech sectors, and boosting export growth. However, these plans are putting it on a collision course with the US, whose protectionist policies could put a spoke in the wheel of China's potential export growth.

Part of China’s growth strategy is to redirect its (unproductive) infrastructure and real estate investments into new technologies. Examples include robotics, quantum computing, nuclear fusion, hydrogen energy, deep-sea mining and genetic engineering. And in the long term it could work. Recent research by Bloomberg Economics shows that high-tech sectors are expected to account for 19% of GDP by 2026, up from 11% in 2018. Combined with battery technology, solar panels and electric vehicles, the share of technology will then reach 23% of GDP, enough to offset the contraction in the property sector. 

China also sees exports as an important avenue for growth. It already has a trade surplus, albeit due to a relatively low level of Chinese consumption. Most importantly, other countries are becoming less willing to accept (cheap) Chinese goods. They believe that Chinese government support creates unfair competition for local producers, and are responding with import tariffs, namely the US and EU.

While these protectionist measures threaten Chinese export growth, the potential remains high because not all countries are equally strict. For example, European measures, such as import tariffs on Chinese cars, are less hostile than those of the US, which has imposed much greater sanctions and tariffs on China. In addition, visits to China by Orban (Hungary), Macron (France) and Meloni (Italy) show that several EU member states want to maintain good relations with China.