Two sessions an opportunity for Beijing to explain its economic thinking

Global Times
Huang Panyue

Illustration: Liu Rui/GT

This year's two sessions are taking place in the middle of a trade war between China and the US. Although both sides are trying to reach a settlement, the ongoing turmoil has been widely discussed. Until now, China's economy has proven to be resilient.

Official data showed total value of exports and imports of goods reached 30.5 trillion yuan ($4.5 trillion) in 2018, up 9.7 percent year on year. China's exports to the US rose 8.6 percent in 2018 while imports dropped 2.3 percent, resulting in a trade surplus of 2.14 trillion yuan, which widened by 14.7 percent.

During the two sessions, Chinese policymakers and lawmakers can ponder on the results of the trade war and establish an effective future strategy. According to data, it seems the new tariffs introduced by US President Donald Trump have not brought the desirable results to justify his long-term economic strategy.

It is cheaper for US manufacturers to import from China, even with the current conditions. Additionally, higher export rebates from China have driven prices lower. The diversification model has remained efficient where China's imports from the US are concerned. Last year, it was easier for Chinese companies to import from other sources compared with the US.

The initial relief for China does not mean there will not be consequences in the medium- and long-run range. Trump, for example, wants to shift the activities of US companies away from China. On a large scale, the country's job market would suffer, so Beijing is trying to prevent such risks.

The West is interested in knowing more about the Chinese economy. Chinese leadership is transforming the country's growth model aimed at safeguarding sustainable development. Growth rates vacillate between 6 and 7 percent and are in line with government targets. But Western politicians, analysts and media regularly compare these numbers to 2015 double-digit figures, raising doubts about the course of China's economy.

The two sessions constitute another opportunity for Beijing to explain its economic thinking. Instead of waiting for a problem to emerge and then reacting under difficult and stressful conditions, Beijing prefers to take preventive measures while not being forced to do so by external influence. The process requires patience while adjustments are made.

Against this backdrop, China's economic transformation is accompanied by a prudent monetary policy seeking to achieve a balance between a necessary slowdown and excessive intervention. While policies addressing the current financial dangers are being proposed, updated and implemented, the principal objective is to increase consumption.

Last year, consumer spending contributed 76.2 percent to GDP growth. The Chinese government intends to strengthen consumer confidence by making tax-cut decisions, thus increasing disposable income.

Last but not least, foreign investment in China will play a catalytic role in making consumption be the driving force for growth, another reason why this year's two sessions are attracting interest from the West. The draft revision of the Foreign Investment Law, which is under review during the two sessions, is expected to govern foreign investment and appease concerns from Western companies on investment opportunities in China.

The new law will also address some of the challenges faced by foreign businesses regarding technology transfers, intellectual property rights protection and equal opportunities in public procurement.

China will soon celebrate its 70th anniversary, meanwhile, the two sessions will provide an outline for the country's priorities in 2019. While China is changing so it can achieve a "new normal," its policies do not respond only to government goals but also to Western economic demands. This is how a win-win collaboration can be sustained in a multi-polar, globalized world.

The author is a lecturer at the European Institute in Nice, France.


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