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Sep[A dialectical view of the opportunities and challenges facing China]
Since 2018, economic and trade frictions between China and the U.S. have constantly escalated, impacting economic development in the two countries. However, these frictions are just waves in the long river of China’s development, which pose challenges on China whilst objectively injecting impetus into the transformation and upgrading of China’s economy. In the face of such economic and trade frictions imposed on China, the destinies of individuals, enterprises and the country are tied together. As long as we make concerted efforts to tide over the immediate crisis and grasp important strategic opportunities, we can address short-term difficulties and challenges brought by economic and trade frictions and safeguard long-term economic and social development.
The trade war is detrimental to everyone
China-U.S. economic and trade frictions prejudice the interests of the U.S., China and even the world. The reason why all walks of life in China follow these frictions closely and some groups even feel worried is that the two countries are highly dependent on each other in trade. At the beginning of the trade war, many export enterprises and their upstream and downstream enterprises feared that losing the market in the U.S. would seriously affect their development, since many enterprises were path-dependent on the U.S. market.
Historical data shows that the U.S. remains an important importer of Chinese goods, but its importance is declining. In the total imports and exports of China, the share of exports to the U.S. has decreased from approximately 22% in 1999 to 16% or so today and that of imports from the U.S. fell from 18.3% in 2000 to 12.8% in 2018. At present, the EU has replaced the U.S. as the largest importer of Chinese goods and China’s exports to ASEAN has also risen from 12.8% to 14%. A shrinking share in the U.S. market will definitely have adverse impacts on some export enterprises in China, but if properly addressed, it could be an external drive for export-oriented enterprises to open diverse markets and increase independent R&D capability.
With the intensification of China-U.S. economic and trade frictions, China has constantly expanded the range of commodities in its counter list and the tariff list published on August 23, 2019 covered most imports from the U.S.. Growing trade frictions have made U.S. farmers miserable and the decline of American manufacturing evident, increasing the burden on relevant Chinese manufacturers, who pass their pressure to Chinese consumers. On the other hand, these challenges have propelled Chinese enterprises to deal with risks and increase their competitiveness through industrial upgrading. Only a strong body weathering trials and hardships can cope with risks more confidently and calmly.
It should be noted that the economic and trade frictions were provoked by the U.S. and each round of additional tariffs was first imposed by the U.S.; China has to take countermeasures to defend its own interests, safeguard the free trade principle and prevent someone in the U.S. from acting willfully. Acts of some people in the U.S. harm others and themselves, not only severely breaking international rules and the market order, triggering global market disruption, but also casting a shadow on international trade development and global economic growth.
China’s economy can still make steady progress
Against the backdrop of escalating China-U.S. economic and trade frictions, it should be understood that China’s economy still seeks progress while maintaining stability and China is still and will long be in an important period of strategic opportunities. Enterprises and individuals should be tied closely to the overall interests of the country, grasp favorable opportunities in this period, stay strategically focused, build confidence in development and cope with economic and trade frictions leisurely, with a view to promoting higher-quality and higher-level economic development in China.
Under circumstances such as global economic slowdown and increasing uncertainties and instability, China maintained an economy growth rate of 6.3%, a surveyed unemployment rate of around 5%, a core CPI of 1.8% and balance of international payments over the first half of 2019. Moreover, consumption contributed more than 60% to economic growth; social investment, investment in high-tech industries and investment in improvement of manufacturing technologies all grew at 10% or more; the share of valued added in the tertiary industry in GDP reached 54.9% in the first half; value added in high-tech manufacturing increased by 9.0% year on year; per unit GDP energy consumption dropped by 2.7% year on year. All these indicators show that China’s economy is moving forward on the path of high-quality development with great potential and high resilience, increasing the confidence in successfully coping with adverse external shocks.
Numerous Chinese export enterprises have embarked on transformation as a result of these economic and trade frictions. As economic and trade exchanges between China and U.S. are affected by worsening economic and trade conflicts, Chinese enterprises have implemented the strategy of market diversification and effectively opened new markets, offsetting adverse impacts of such conflicts. In January through July 2019, China’s exports registered RMB 9.48 trillion, representing an increase of 6.7%; trade surplus registered RMB 1.55 trillion, growing by 47.4%. Many enterprises have adjusted their export orientations and identified new business growth points. China has made great headway in the trade with countries along the Belt and Road. In January through July 2019, imports and exports between China and countries along the Belt and Road rose by 10.2%, driving an increase of 2.8% in the total imports and exports.
On the whole, despite a continuous trade war between China and the U.S., China’s exports have grown generally, fully indicating the ability of Chinese enterprises to open a broader market. In future, although trade between China and the U.S. might further reduce, China and countries along the Belt and Road will witness closer economic and trade exchanges with continuous advancement of the Belt and Road Initiative (BRI), which can help hedge against China-U.S. economic and trade frictions. Meanwhile, China’s vast market brings huge opportunities to the rest of the world and by actively expanding opening-up, we will work with other countries to promote common prosperity and development.
United as one and perform respective duties
Both history and reality tell us that development cannot be plain sailing. Difficulties and challenges are not horrible, and the key is to turn the crisis into opportunities through reform and innovation and constantly improve the quality and space of development in that process. In the course of responding to China-U.S. economic and trade frictions, as long as individuals, enterprises and the country pull together and unite as one to forge ahead, we certainly can properly address various risks and challenges and turn adversity into opportunities.
For every individual, performing his/her own duties with dedication will help resolve negative impacts of the economic and trade frictions. When farmers work hard to fill the gap in demand for agricultural products, researchers make breakthroughs in core technologies with great enthusiasm and financial practitioners trade in the market calmly, we will be more confident and capable in dealing with the economic and trade frictions.
High-quality development of China rests with us. Export enterprises should fully understand the toughness and persistence of China-U.S. economic and trade frictions, proactively turn negative external impacts into endogenous impetus driving their transformation and upgrading, and make ongoing efforts to open diverse markets, invest more in R&D and technology, raise the level of technology and increase the international competitiveness of products, so that Chinese products are more competitive and even irreplaceable in the international market.
So far, the capacity and output value of China’s manufacturing industry has steadily occupied the first place in the world. However, basic and sophisticated manufacturing products remain a weakness of “Made in China”. This requires relevant enterprises to draw lessons from failures, increase investments in R&D, quicken technology innovation, establish a cooperative alliance with upstream and downstream enterprises, bolster areas of weakness and seize the control over development whilst suffering from trade frictions.
Trade frictions have also posed new challenges on the government’s governance ability and management level. After years of development, governments at all levels in China already have strong macro control and social governance capabilities, and should continue to break down barriers from systems and mechanisms in management, inject vitality into innovation and insist on deepening reform and expanding opening-up, so as to push high-quality economic development to a new level.
Wang Xiaosong: Research Fellow at National Academy of Development and Strategy, and Professor at School of Economics, Renmin University of China
The original article was published at:
https://s.cloud.gmw.cn/gmrb/c/2019-09-06/1300098.shtml
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