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Several issues that need to be further clarified about Sino-US trade frictions

By Qing Yuan of Qiushi Magazine | chinadaily.com.cn | Updated: 2019-06-18 10:52
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An aerial view of containers stacked at the fully automated container terminal at the Port of Qingdao in Qingdao city, East China's Shandong province, March 8, 2019. [Photo/IC]

9. Can the Sino-US trade frictions crush the Chinese economy?

The US has continuously escalated Sino-US trade frictions and used trade bullying and various other measures against China, which will undoubtedly adversely affect the production and operation of Chinese enterprises and people's consumption and expectations, and increase the downward pressure on the economy. However, if we take a long-term, comprehensive and fundamental view to calmly and objectively examine it, rather than being caught in the short-term economic fluctuations or the consideration of gains and losses for the moment, we can draw the conclusion that the impact will be generally controllable and positive. The good trend is unchanged, the comprehensive advantages are obvious, and the means of regulation are sufficient. There are more opportunities than challenges.

The impact will be generally controllable. In 2018, the dependence of China's growth on exports was only 18.24 percent, and the impact of exports on China's economic growth is gradually decreasing. Since the beginning of this year, in spite of the slowdown in world economic growth and international trade, China's economy has started well, and the main economic indicators have remained within a reasonable range. China is optimizing its economic structure, changing its development mode, and improving its quality and efficiency. Chinese economy is well poised to keep the healthy trend of stable growth. Sino-US economic and trade frictions seem to affect public expectations, driving investors to make irrational choices. However, since 2018, thanks to the influence of a series of the central government's policies to stabilize employment, finance, foreign trade, foreign investment, investment, and expectations, China's economy has been running steadily and healthily. The policy tools available in China are diverse, mature and reliable, and can be used at any time. The US side should not underestimate China's policy, ability and experience in dealing with economic and trade frictions.

The good trend is unchanged. Although the Sino-US economic and trade frictions have added new uncertainties to China's economy, the long-term positive trend of China's economic development remained unchanged. The good supporting foundation and conditions for sustained growth have not changed, and the upward trend of economic restructuring and optimization has not changed. China has nearly 1.4 billion people, of whom 900 million make up the labor force. China has 170 million highly educated and skilled human resources, and the world's largest middle-income group, as well as more than 100 million market entities. As the world's largest manufacturing country, China has an independent and complete industrial system and national economic system. It is the only country in the world that has all the industrial categories of the UN industry classification. The domestic demand-led economic development model has become a powerful weapon for China to resist foreign trade risks. In 2018, the contribution rate of domestic demand to economic growth reached 108.6 percent, of which the final consumption contribution rate touched 76.2 percent. Consumption has become the main engine for economic growth. The new driving force represented by strategic emerging industries and sharing economy has continued to grow, injecting new vitality into China's economic development. In 2018, China's R&D investment ranked second in the world, technological innovation capability continued to improve, new industries and business models flourished, and the economy showed a good momentum of high-quality development.

The comprehensive advantages are obvious. As a large developing socialist country, China has a special advantage in its economic development from the perspective of the overlap of time, space and institutional advantages. First, in the process of accelerating industrialization and urbanization, the factors of production are transferring from agriculture to industry, and all economic sectors and various social undertakings will see explosive growth, which is the general law of the transformation and upgrading of the newly developing economies. Second, as a large country, it has an advantage in terms of population, space, domestic demand, and capital accumulation. This will provide strong resilience, potential and room for maneuvering. Third, it has obvious institutional advantages, given the combination of socialism and market economy that can fully mobilize the enthusiasm of all parties and make effective use of various resources. The three overlapping advantages have created a miracle in the Chinese economy, and now the advantages continue to expand rather than decrease.

There are adequate measures for adjustment. Entering a new era, China adheres to the new development concept, firmly grasps the fundamental requirement of high-quality development, takes supply-side structural reform as the main line, continuously innovates and improves macro-control, and has gained valuable experience. China has formed a comprehensive macro- regulation system, which integrates government and market, short-term and medium- and long-term targets, economic output and structure, domestic and international co-ordination, reform and development coordination. Now, there's plenty of room for adjusting fiscal policy, monetary policy, income policy, industrial policy, and science and technology policy, as well as investment policy. China is fully qualified, capable and confident in responding to various risks and challenges.

There are more opportunities than challenges. The world today is facing unprecedented changes not seen in the past 100 years. Faced with the severe challenges of Sino-US economic and trade frictions, the political superiority of the CPC's strong leadership and concerted efforts to carry out major tasks will be further demonstrated. It will surely unite the people's forces, turning the crisis into an opportunity for development and turning the pressure of development into the power of high quality development. We are more soberly aware that China still has obvious shortcomings in key technology in core fields. Key technologies are not buyable. We must firmly grasp the initiative of innovation and development. We continue to increase investment on research and development in key core technology areas, bring together more high-end talents, enhance the ability of scientific and technological innovation, and get us out of the predicament wherein core technology is controlled by others. We are more clearly aware that we must grasp the general trend of the new industrial revolution and the scientific and technological revolution, grasp the opportunities of digitalization, internet, and intelligent development, explore new technologies and business models, and explore new growth engine and development paths. We will strive to lead the world at the forefront of new technologies, enhancing China's ability to withstand various risks and challenges.

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