China’s Plan for Reinvigorating Its Economy Has the World Worried

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In today’s big topic, we look at how China’s plan to reinvigorate its economy is the rest of the world worried.

What’s on deck:

But first, it’s a construction bargain.

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The big story

The return of the Chinese shock

If you build it, they will come. Even if it doesn’t, keep building.

This is the West’s main concern with China these days. The country overproduces goods and then flood global markets with them to save its ailing economy, writes Business Insider’s Huileng Tan.

We have seen this strategy before in China. Decades ago, as the country opened its economy, China experienced rapid industrialization, allowing it to produce cheap goods.

The United States and other countries have encouraged China, benefiting greatly from lower production costs. But the result was that American communities that depended on manufacturing jobs were decimated.

The process became known as the “China Shock”, and the rest of the world not interested in a sequelwrites Huileng.

The Chinese shock 2.0 is not a total repetition. This time, China has focused on green energy, which involves manufacturing electric vehicles, solar cells and lithium-ion batteries. And it’s also about setting up a supply chain to get the materials needed for production, which is also a concern for the West.

US Treasury Secretary Janet Yellen has already warned that China Shock 2.0 could destabilize the global economy, especially impacting green energy exports. And a report from the New York Federal Reserve suggests it could ultimately lead to higher inflation in the United States.

Even though it faces global pressure, some believe China remains a good investment.

The most notable of these is Ray Dalio. The billionaire founder of Bridgewater Associates is a long-time investor in the country, and that’s not going to change anytime soon. He recognized China faces major challenges, describing it as a “100-year storm.” But he doesn’t try to get out. Rather, he believes that now is the best time to invest in China, citing the adage “the time to buy is when there is blood in the streets.”

Dalio is not the only one to be optimistic. Economist Nicholas R. Lardy estimates experts misinterpret data. He pointed out that China’s GDP growth outpaces that of the United States when the figures are adjusted for disinflation and inflation in each country, respectively.

Regardless of which side you’re on, this is a topic that will remain relevant for the foreseeable future.

Relations between the United States and China will be in focus as the presidential election approaches. And while former President Donald Trump has been more vocal in favor of escalating the trade war, both candidates should respond head-onif he is elected.

Brief news

Your Monday headline catch-up

A quick recap of the weekend’s news:

3 things about the markets

1. Nvidia’s streak of success may be coming to an end. Some Wall Street analysts are cooling the stock market’s darling, which suggests that it cannot maintain its rapid growth rate. There is also the risk that companies will start building chips to run specific AI workloads in-house.

2. The nightmare of no rate cut this year could become a reality. What once seemed impossible – with interest rates remaining unchanged in 2024 – could now be the direction things are headed, according to some experts.

3. Angus Deaton is rethinking. The Nobel Prize-winning economist told BI that his views on unions, free trade and immigration have changed in recent years. “I think the country is kind of in a bad place, despite all this hype that’s going on about how we’re doing economically. And so I’m an economist now and I kind of wonder, ‘Well , how should I change?’ my practice of economics a little?’” he said.

3 things in technology

1. Tesla on trial for fatal 2018 Autopilot crash. Apple engineer Walter Huang died when his Tesla Model X SUV crashed into a concrete barrier while in autopilot mode. Electric vehicle maker goes to court today following a wrongful death lawsuit filed by his family.

2. The apple falls far from the tree. It was a difficult year 2024 for the tech giant, with declining iPhone sales, stalled electric vehicle plans and a massive antitrust lawsuit. Worse still: last week, the company laid off 600 employees.

3. Wall Street has a new technology obsession. Analysts I can’t stop talking about Salesforce’s competitor, Hubspot. Its stock jumped last week after Reuters reported that Google’s parent company, Alphabet, had considered making a $34 billion takeover offer for the software maker.

3 things in business

1. The biggest secret at work: your office crush. Over the years, workplace crushes have remained remarkably common. It makes sense: we spend half our waking lives at work. These favorites have the power to bring out our best work and even make the office experience fun. But they can also do it a heartbreaking.

2. Prepare for sneaky new credit card fees. Even though some fees might go down soon, that just means businesses are about to find new ways to get money from you.

3. Younger generations are spending money on groceries. McKinsey surveyed 4,000 people and found that groceries are the hottest new crazy category for millennials and gen Z. That’s good news for companies like flashy canned water brand Liquid Death, recently valued at $1.4 billion.

In other news

What’s happening today

• The first total solar eclipse will be visible in the United States since 2017.

• The NCAA men’s basketball championship game will be played in Glendale, Arizona.

The Insider Today team: Dan DeFrancesco, associate editor and presenter, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, editor, London. George Glover, journalist, in London. Grace Lett, associate editor, in Chicago.