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A Monthly Report on Great Power Activities and Strategic Intent


Navigating Complexity:

A Brief Analysis of Global Economic Trends in Q1 2024

Global economic growth is expected to increase slightly in advanced economies but slow down in emerging markets. This highlights the importance of strategic economic management and diversified investment approaches in the face of global uncertainties and structural challenges.



The first quarter GDP data for 2024 was recently released, and it paints a complex picture of China's economic landscape and its substantial role in international trade. While China retains its status as the world's second-largest economy and the premier exporter of manufactured goods, it confronts internal challenges that temper its growth. The analysis notes persistent consumer demand and real estate sector weaknesses despite slight housing price and export recovery. Moreover, demographic shifts, particularly an aging population, pose long-term obstacles to sustained economic vitality. These internal dynamics, coupled with external pressures such as ongoing U.S.-China trade tensions and the sensitive issue of Taiwan, where its stock market constitutes a large segment of the MSCI Emerging Markets Index, create a nuanced environment for investors, emphasizing the need for diversified portfolios to navigate uncertainties.

According to the Bureau of Economic Analysis, economic performance is mixed in the United States. The real gross domestic product (GDP) grew at an annual rate of 1.6% in the first quarter of 2024, a slowdown from the 3.4% growth in the final quarter of 2023. This increase was driven by higher consumer spending, residential and nonresidential investments, and state and local government spending, which offset declines in private inventory investment. Notably, the deceleration in GDP growth reflected slower consumer spending and a decline in federal spending despite some increases in residential investment and imports.

Globally, economic growth is expected to rise marginally for advanced economies from 1.6% in 2023 to 1.7% in 2024 and further to 1.8% in 2025. However, this modest uptick contrasts with a slight deceleration in emerging markets and developing economies. While the global economic outlook has stabilized with lower inflation and resilient economic activity, challenges such as income disparities, fiscal consolidation needs, and the imperatives of geoeconomic cooperation remain pressing. These issues call for strategic policy adjustments to foster sustainable growth and manage global risks effectively.

Compared to the broader global economic context, the U.S. and China hold pivotal roles but face distinct challenges. The U.S. shows resilience with diversified economic drivers and robust institutional frameworks, whereas China grapples with structural slowdowns exacerbated by demographic trends and trade tensions. As central players in the global economy, these two countries economic policies and stability carry significant implications for global economic dynamics, underscoring the interconnected nature of modern economies and the importance of strategic economic management.




Declining. Anne Stevenson-Yang's article in The New York Times (May 11, 2024) analyzes China's economic model and explains why it's no longer sustainable. China's past success was due to heavy government investment in industries and infrastructure under the strict control of the Communist Party.


China's strategy of fueling growth through large-scale investments has led to overcapacity in industries and inefficiencies, while loans to local government led to over-investment in real property, resulting in substantial downturns in the real estate sector. The Communist Party's excessive control over the economy has also stifled innovation and discouraged the growth of the private sector.  China's economy heavily relies on exports, leading to trade tensions as other countries protect their markets from cheap imports. Financial mismanagement is also a concern, with local governments incurring massive debts through unchecked borrowing against state-owned land, leading to fiscal crises and cuts in public services.


China experiences high youth unemployment and public dissatisfaction. The previous methods of stimulating the economy are no longer viable. The article concludes that China needs significant reforms to reduce government control and encourage private sector growth to revive its previous economic momentum.


Ascending: The Foreign Affairs article "China Is Still Rising: Don’t Underestimate the World’s Second-Biggest Economy" by Nicholas R. Lardy (April 2, 2024) offers a robust defense of the continued potential for China's economic growth, countering the prevalent view that China’s economic expansion may have plateaued. Lardy argues that many critics have misinterpreted the slowdown in China’s economy, not recognizing the underlying resilience that promises sustained growth.


Lardy challenges and disproves a number of misconceptions that have caused some to anticipate a slowdown or regression in China's economic prospects. Firstly, he addresses the idea that China's GDP growth in comparison to the United States has halted. He explains that this view neglects to take into account lower inflation rates in China and the effects of currency fluctuations. However, when these factors are considered, the picture is more nuanced.


Additionally, Lardy dispels the fear of entrenched deflation leading to a recession in China, pointing out that core consumer prices are rising, and investment in various sectors continues to grow, indicating a healthy economic environment conducive to expansion rather than contraction. He also addresses concerns about the property market and private investment, suggesting that although real challenges exist, the situation is more nuanced and less dire than often portrayed.


China does face significant economic challenges, including demographic shifts and political pressures, but its fundamental economic structure and policy responses are robust enough to continue driving growth. Lardy's analysis implies that underestimating China's economic resilience could be a strategic misstep for global policymakers, particularly in the United States, as China is likely to remain a dominant economic force on the global stage.

Conclusion:  China's economy is facing a period of deceleration, the strategic focus on innovation, technological advancement, and state-led investments in strategic sectors suggests a determination to ascend in the long term. The current economic situation can be seen as a phase of adjustment rather than a definitive decline, with the leadership's long-term strategies to overcome immediate challenges and secure a dominant position in the global economy.


2024 Q1 GDP: Friends and Rivals

  • Russia's> Q1 GDP 2024 increased at an annual rate of 5.4%, the Economic Development Ministry reported.

  • China's. Q1 GDP 2024 growth of 5.3% year over year is faster than expected despite protracted property sector weakness and mounting local government debt.

  • Iran's. Q1 GDP 2024 increased at an annual rate of 3.3%, according to the World Bank.

  • United States. Q1 GDP 2024 increased at an annual rate of 1.6%, well below the 2.4% estimate.

  • Japan’s. Q1 GDP 2024 increased at an annual rate of 1.5% after growth drivers slumped unexpectedly.

  • Germany’s. Q1 GDP 2024 increased at an annual rate of 0.2%, after avoiding a recession


  • US to extend several Trump-era duties - set to target electric cars.  After a multiyear review of Trump-era duties. reject across-the-board hikes

  • Germany is footing the bill for Ukraine to receive three HIMARS mobile rocket systems from US stocks.

  • The Chips and Science Act has received support in the form of over $100 billion in grants, loans, and guarantees to encourage semiconductor firms to establish their factories in America. The Semiconductor Industry Association reported that this initiative has resulted in an enormous influx of investment and is expected to reverse the declining domestic chip production trend.

  • The Biden administration has committed to providing hundreds of millions of dollars to revitalize the Lobito Corridor, a 1,200-mile railway intended to transport important minerals from the Democratic Republic of the Congo and Zambia to the Angolan coast. The DRC is home to the largest cobalt reserves in the world, while Zambia is rich in copper.

  • Global trade contracted by 3% in 2023, amounting to around $1 trillion, compared to the high of $32 trillion in 2022. However, the services sector showed resilience with an 8% increase from the previous year, while trade in goods experienced a 5% decline compared to 2022. International trade is expected to rebound in 2024.

  • TikTok has filed a lawsuit against the US government over a new law requiring its Chinese parent company, ByteDance, to sell the app. If ByteDance fails to sell the app, it will face a ban in the US. The lawsuit has sparked a debate on the issues of national security and free speech. It is expected that the case will eventually reach the Supreme Court.

  • The current strong dollar is causing problems in financial markets and affecting the global trade recovery. Weaker domestic currencies in economies that are already worried about inflation have led to higher import costs. This is happening when global prices for crude oil, food, and logistics are already increasing. Even exporters, who would normally be happy about a strong dollar, feel more subdued.

  • France is taking a strong stance toward China. Finance Minister Bruno Le Maire stated that the "happy globalization" era is over and called on the EU to use more tools to rebalance trade with China.



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