China: US President Biden called China's economy a 'bomb', said - explosion can happen anytime
China's consumer sector is in the grip of deflation. There the factory gate prices are also decreasing since July.
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US President Joe Biden has made a big prediction about China's economy. Joe Biden said on Thursday that China's economy is like a ticking bomb, which can explode at any time. Joe Biden attributed this to China's slow economic growth rate. During an event in the US state of Utah, Biden said that 'they (China) have some problems, which are not good for them. When there are problems with bad people, they only do bad things.
Decline in China's economy
Joe Biden said that China is in trouble and he does not want to trouble China and wants to have a rational relationship with them. Explain that China's consumer sector has come under the grip of deflation. There the factory gate prices are also decreasing since July. China's growth rate may slow due to stagnant consumer prices and wages. The decrease in domestic spending in China is affecting the economic development there after Corona. Since the early days of the pandemic, China has been facing a sharp drop in exports, while imports have also plummeted due to a collapse in domestic and global demand.
Explain that deflation means falling prices of goods and services, which can be due to many reasons including decreased consumption. Falling prices of goods may seem beneficial, but consumers usually postpone purchases in anticipation of a further drop in prices.
Sino-US relations tense
Joe Biden had called Chinese President Xi Jinping a dictator in June last year as well. To which China had strongly objected and termed Biden's remarks as a provocative action. US Secretary of State Antony Blinken has recently returned from visiting China. Relations between the two countries are going through a bitter phase. In such a situation, Biden's latest comment may also cause tension in the relations between the two countries.
America stopped strategic investment in China
Taking a major step against China, the US has issued an executive order, under which US investment in China's strategically important companies, startups has been banned. The US fears that China is modernizing its military using American investment and expertise. The main purpose of this order is to ban US investment in areas such as semiconductors, microelectronics, quantum information technology and special types of artificial intelligence.