20 Years of US-China Economic Synchronization Ends

Researcher Jeong Jeong predicted that this summit would be similar to previous ones.

During the US-China summit in May, representatives from major US companies like Apple, Tesla, and Nvidia met with Chinese CEOs, but there has since been a lack of substantial change in their relationship.

While it won't be entirely empty-handed given the involvement of companies from both countries, the maximum possible agreements are expected to be an extension of rare earth regulation waivers or mutual tariffs. China is more interested in securing technology and equipment than importing finished products.

Since 2000, a clear synchronization phenomenon has been observed between the global economy and the Chinese economy.

This was due to a division of labor structure where the US supplied currency, and China produced final goods via intermediate goods countries like Korea and Taiwan.

However, cracks began to appear in this synchronization starting with the 2017 US-China trade dispute, and the economic cycle decoupling deepened particularly as China pursued entirely different policies during the COVID-19 pandemic.

Researcher Jeong Jeong explained, "It completely changed from 2000 onwards. These improvements moved identically... It finally started to break. Starting with the trade dispute between President Trump and President Xi Jinping, that is, between the US and China, in 2017 and 2018, this cycle was gradually preparing to diverge, to break, and especially through COVID, China implemented entirely different policies."

After 2024, the trajectories of the Western and Chinese economies are expected to diverge even further.

In response to Western regulations, China is focusing on fostering new growth industries such as electric vehicles, batteries, and solar power, and is promoting independent technological standards. This suggests that the US and Chinese economies are no longer organically intertwined, unlike in the past.

However, existing economic indicators still show a high reliance on real estate, creating an illusion. Researcher Jeong Jeong stated, "Even though the direction China wants to go has changed, the old data is still heavily reflected in the indicators."

While the 'trade-in' policy for automobiles and home appliances shows a decline due to base effects, consumption indicators such as cosmetics, medical services, and leisure are actually on the rise.

Chinese households are showing a trend of repaying existing loans rather than taking out new ones.

In first-tier cities like Shenzhen and Guangzhou, the proportion of homes purchased with cash without loans is increasing. This is interpreted as a shift from an era of quantitative expansion in the real estate market to an emphasis on qualitative growth.

Attempts to defend and increase real estate prices are appearing, centered on first-tier cities. While overall still negative, leading indicators suggest the possibility of a positive turnaround by the end of this year or the first half of next year.

This is analyzed as a reflection of the Chinese government's intention to enhance overall economic soundness through reduced real estate leverage and channeling funds into corporate technology investments.