Chinese economy fares steadily ahead amid uncertainties

Note: The following article is taken from the Chinese-language "Commentaries on International Affairs".

China's General Administration of Customs announced on Monday that the country's foreign trade in goods rose 4.1 percent year on year in the first five months of this year to 12 trillion yuan (about 1.76 trillion U.S. dollars). On the same day, the Ministry of Culture and Tourism announced that China saw nearly 96 million domestic tourist trips made during the three-day Dragon Boat Festival holiday, which ended on Sunday, up 7.7 percent from the same period last year. And tourism revenues have surpassed 39 billion yuan (about 5.7 billion U.S. dollars), up 8.6 percent year-on-year.

Stacks of containers wait to be shipped abroad at the port of Lianyungang, east China's Jiangsu province, June 10, 2019. [Photo: IC]

The figures come amid escalating global trade frictions and slowing international trade, indicating the strong resilience, great potential and momentum in the Chinese economy.

China's foreign trade in the first five months features two remarkable characteristics:

The growth rate of general trade, which contains higher brand value and technological content, reached 6.1 percent. Its share in the country's total foreign trade increased by 1.1 percentage points in the first five months year-on-year. This indicates that China's ongoing industrial upgrading has made its products more competitive in the international market.

Though the total value of Sino-US trade in the first five months fell 9.6 percent, China's trade with other major partners, including the European Union, ASEAN and Japan, continues to grow. The growth in trade volumes among China and Belt and Road countries has come in 4.9 percentage points higher than the overall growth rate of the country's foreign trade. This means that China's foreign trade partners are increasingly diversified, which helps enhance China's ability of dealing with the downward pressure in foreign trade.

The better-than-expected figures didn't come easy. In fact, China couldn't have been what it is now without overcoming varied economic difficulties. The country's economy has become increasingly resilient after marching through the 1997 Asian financial crisis and the 2008 global financial meltdown. As the world's second largest economy with the world's largest industrial output, the largest goods trading nation, and the largest foreign exchange reserve holder, China's total economic output has exceeded 90 trillion yuan (13.03 trillion U.S. dollars). The country has the world's largest consumer market with about 1.4 billion people, as well as the world's most complete industrial supply chain. Taken all together, authorities in China should have every confidence that they are able to cope with any economic uncertainty.

Moreover, high-quality development has become another remarkable feature of the Chinese economy. Domestic demand has become the major force driving economic development, contributing more than 100 percent to the country's growth. The dependence of China's economy on foreign trade has fallen to around 33 percent with its economic structure continuously being optimized. In 2018, China's total research spending increased to account for 2.18 percent of the total GDP, with research and development contributing over 58 percent of GDP growth. China, for the first time, cracked into the world's top 20 most-innovative economies last year. The economic transformation driven by innovation has built up the country's capability in managing external risks.

An increasing open Chinese economy has also offered a haven for international capital. In the first four months of this year, China’s actual use of foreign investment increased by 6.4 percent year-on-year. Multinational companies such as Qualcomm, OSI Group, Jaguar Land Rover and Schneider Electric have said that they will continue to explore the Chinese market and participate in the high-quality development of China's economy.

In fact, the steadily growing Chinese economy has been playing a stabilizing role in world economic development. The country’s contribution to global growth has been standing above 30 percent for years. Former French Prime Minister Jean-Pierre Raffarin has said the predictability of China's development trend is a valuable quality in today's world. According to the long-term forecast of the OECD, China will remain the largest contributor to global growth.