Illustration: Chen Xia / GT
China’s economy grew 7.9% from April to June, the National Bureau of Statistics (NBS) said on Thursday. The growth rate, below the 8.1% forecast by most market analysts, immediately lured the mainstream Western media out to pour cold water on the world’s second-largest economy, with some hinting that it will deteriorate further. in the coming months and unable to compete with the United States. economy.
But it will prove these media experts wrong when the year-end results are released. Past experiences show the world that the Chinese government possesses unparalleled insight and coveted ability in managing its economy. This explains why China stood firm and prevailed during the 2008-09 global financial debacle and the 2020 novel coronavirus health crisis, while many other countries, including the United States, suffered severe recessions, loss of life and social upheaval.
Chinese policymakers have many political tools to steer the economy to the next level. The People’s Bank of China’s 50 basis point reduction in the reserve requirement ratio, or the amount of funds commercial lenders must hold in reserve, freed up 1,000 billion yuan ($ 154 billion) of cash in the lender. economy last week to support the third – quarter GDP is growing at a considerably higher rate.
Unlike the Trump and Biden administrations which resorted to multiple rounds of pandemic stimulus packages, spending more than $ 5,000 billion in borrowed money to keep the US economy at its “high sugar level,” Beijing has been cautious to avoid “flooding” its economy with excessive amounts of liquidity – this partly explains why the yuan has appreciated steadily against the US dollar since March 2020 by more than 10% until today hui.
In fact, to manage the financial risks of negatively impacting the economy, China has deleveraged and all the so-called “too big to fail” public banking giants are now on a stronger and healthier footing. Local authority debt has also been better controlled. In the first five months of this year, special purpose bond issues totaled just 1.2 trillion yuan, compared to 2.3 trillion issued in the same period last year.
Therefore, Chinese policymakers have leeway to create a stronger and healthier economy. They could reduce the reserve rate again in the second half of the year, or lower the benchmark interest rate to ensure the economy grows to 8.5% in 2021 and 7% in 2022, when the Communist Party ruling Chinese (CCP) is expected to hold its 20th National Congress, another event of global significance.
Chinese economists are aware that the economy is very resilient after weathering the fallout from the coronavirus pandemic. Increasingly, the giant economy is being boosted by increasing domestic consumption, growing foreign demand for Chinese products, and the government’s focus on infrastructure investment, investment in new technologies and high technology and the continuous improvement of the well-being of 1.4 billion people.
The “dual circulation” development strategy proposed by senior Chinese leaders last year – which is mainly based on increasing the consumption power of Chinese households and actively accelerating the “electromagnetic effect” of the economy by expanding foreign trade and investment – should be applied vigorously, as the iconic “Belt and Road” initiative helps other friendly countries to develop faster, while stimulating the appetite of these countries for Chinese products and technology.
Looking at the detailed figures released by the NBS on Thursday, retail sales in June rose 12.1% from a year ago and industrial production rose 8.3%, both above estimates by the market. Meanwhile, the customs administration said earlier last week that China’s exports grew 32.2% more than expected in June. These figures are a testament to the health and resilience of the Chinese economy.
“Our economy has experienced a sustained and steady recovery with a recovery in production and demand, employment and prices remaining stable, new driving forces are rapidly prospering, improved quality and efficiency, expectations market improving and blue chip macroeconomic indicators remaining within a reasonable range, “the statistics bureau said. So the claims by some American media that the Chinese economy is hitting the wall and going to sink and bankrupt are downright absurd.
Moreover, their rhetoric of China’s “exporting inflation” to the United States is equally laughable.
It is the lavish budget spending policies of US President Joe Biden, in particular the $ 1.9 trillion “American bailout” he signed in March, that is responsible for the sharp 5.4% increase. of US CPI inflation in June.
And why do products made in China seem more expensive to American families these days? Just ask U.S. Federal Reserve officials how much they injected the greenback into the global monetary system, causing a stormy wave of price hikes in commodities such as steel, copper, lithium, gasoline. , wood and chemicals.
In addition, the Biden administration inheriting Trump’s higher tariff policy and waging a technological “decoupling” battle with China that has seriously disrupted global supply chains, including a prolonged shortage of automotive chips, has made soaring prices in US supermarkets and car dealerships. If the policies of the US government are not revised quickly, the rise in prices will only increase in the coming months, forcing the Fed to raise interest rates and stifling growth.
Cooperative competition is the right way for Washington to continue the economic competition of the United States with that of China. Sadly, the Biden administration, eager to contain China’s rise to power, has followed a roadmap of “adversarial competition” with China, which runs counter to economic fundamentals and global development trends. Now inflation has raised its ugly head, hampering an emerging economic recovery in the United States.
It won’t take very long for American media experts and the American people to recognize that Biden’s policies are handcuffing the American economy, while at the same time, the Chinese economy and other economies large and small alike. who interact positively with China, continue to move forward.
The author is an editor at the Global Times. [email protected]