Will China slow down supply chains?

Author: Marek Szymański
Will China slow down supply chains?

According to the latest European Commission forecasts, EU countries will end the year with an average GDP growth of around 1%, and next year the EU average will be 1.4%.

Experts believe that supply chains should experience a recovery next year, but there is one but. The global, including European, economy is closely linked to what is happening in China. Meanwhile, the world’s second economy is clearly starting to slow down and the planned economic growth of 5% is unrealistic, according to analysts. 

Chinese economic growth has been based largely on heavy investment, less on consumption. The Chinese authorities do not want to change this trend and the economy is facing increasing problems. – China will not grow as fast as in previous years. The structural slowdown is already a reality. And it is becoming a really big problem for the authorities,” Jakub Jakóbowski, China expert and deputy director of the Centre for Eastern Studies, comments for Business Insider. Industrial production rose by 3.7 per cent year-on-year in July, a weak result for Chinese conditions. Indeed, market analysts had expected around 4.4%.

China’s economic slowdown means fewer imports from Europe as a whole, particularly from Germany, which could consequently affect supply chains across the continent. Indeed, the German economy supplies around 8% of its products to the Chinese market, mainly electronics, machinery and automotive products. For its products, however, it needs suppliers from other countries, in large part from Poland.  

As Sebastian Sajnóg of the Polish Economic Institute points out, the problems of the Chinese economy may be felt in Poland through a possible downturn in Germany. The Americans want to take advantage of the weakness of the Chinese economy: at the just-concluded G7 summit of the world’s largest economies in Delhi, President Joe Biden announced the creation of a revolutionary transport corridor bypassing China’s New Silk Road. Supply chains would lead to Europe via the IMEC (India-Middle East-Europe Economic Corridor), which runs from Indian ports through the Middle East.