China Beige Book: "China's intention to boost exports will trigger a new trade war next year"

China plans to transition to a healthier growth model, but its strategy may set off a real showdown with other major economies, the CEO of Chinese economic data and analysis platform China Beige Book, Leland Miller, told CNBC, quoted by Business Insider.

According to the said publication, Beijing is putting an increasing emphasis on manufacturing, so it will have to sell more products in international markets. "They have to get the export engine going," Miller said. "But this is going to bring a lot of problems globally, politically. I think we're going to get into a trade war next year. That's because China's economic growth model is not sustainable given the political sensitivities of the rest of the world ".

In Miller's view, Beijing is giving more credit to manufacturing in hopes of reducing China's reliance on the real estate sector. Real estate currently accounts for about a quarter of the country's GDP, but the cascade of defaults has painted a grim picture for the world's second-largest economy. In addition, the country is facing a series of post-pandemic problems, including the exodus of foreign investors, deflation and unemployment, writes Business Insider.

According to the source, foreign analysts have long called for Beijing to come up with decisive measures to counter such problems, but Miller argues that this is not at all what China wants to achieve:

"They're worried about reckless credit expansion, they're worried about the real estate sector," he said. "They want to focus on national security priorities, build a domestic chip ecosystem, solidify the core of the economy, focus on advanced manufacturing."

Thus, China no longer prioritizes the rapid growth of previous decades. Besides, his 5% growth target for this year is irrelevant: "They want to make sure there is enough support in the economy to avoid a downward spiral of confidence," Miller said.

Although some analysts believe that China's production has reached its peak, the country continues to perform in terms of electric vehicle, solar and battery production. Already, Chinese electric vehicle maker BYD has overtaken Tesla in the number of cars sold and has started cutting prices internationally to attract buyers. Chinese solar panels have also flooded Europe, sparking concerns that one of the region's largest manufacturing sites may close, Business Insider writes.