Has China’s rise into a global economic superpower stalled?

The fall from grace of China’s Anbang Insurance Group Co. Ltd. continues to get steeper. Not long ago, the mysterious firm was chasing one foreign deal after another, becoming a symbol of China’s global economic ambitions. Now it appears the government may be pressuring Anbang to divest those prized foreign assets. If that proves to be the case, China will have given foreign businessmen yet another reason to be wary of working with Chinese companies: the uncertainty of an erratic, intrusive state meddling in private financial affairs.
But the Anbang case is also part of something bigger, and for China’s economic future, scarier. In just about every category, China’s rise into a global economic superpower has stalled. And the Chinese government sits at the heart of the problem.
Most people around the world still seem to believe China’s ascent is relentless and inevitable. A recent survey by the Pew Research Center showed that while more of those polled still see the US as the world’s leading economy, China is quickly narrowing the gap. Chinese President Xi Jinping has been feeding that positive image by presenting his country as a champion of globalization, trade and economic progress.
Statistics tell a different story. The common perception is that China is swamping the world with exports of everything from mobile phones to steel to sneakers. In fact, the entire Chinese export machine is sputtering. Between 2006 and 2011, China’s total merchandise exports nearly doubled, powering the country through the Great Recession. Since then, they’ve increased less than 11 percent, according to World Trade Organization data.
The same trend holds for China’s currency. In late 2014, the renminbi broke into the top five most-used currencies for global payments, reaching an almost 2.2 percent share. China seemed well on the way to achieving its long-stated goal of turning the yuan into a true rival to the dollar. But that progress has reversed. In June, the renminbi chalked up only a 2 percent share, according to Swift, slipping behind the Canadian dollar.
The situation isn’t very different in China’s capital markets. While the government has cracked open its stock and bond markets to foreign investors, they still prefer buying Chinese shares listed in Hong Kong or New York to those in Shanghai or Shenzhen. For instance, domestically traded A-shares in a China equities fund managed by Zurich-based GAM account for less than 10 percent of its holdings.
In part, China is simply running into the difficult transition every country faces when losing its low-cost advantage. Facing stiff competition from countries like India and Vietnam, where wages are lower, China is losing ground in apparel and textile exports to the United States.