Xinhua Commentary: A resilient Chinese economy rebuts naysayers-Xinhua

Xinhua Commentary: A resilient Chinese economy rebuts naysayers

Source: Xinhua

Editor: huaxia

2023-09-05 17:13:30

BEIJING, Sept. 5 (Xinhua) -- When it comes to China, some Westerners have a tendency to draw conclusions based on incomplete or inaccurate information, often applying attention-grabbing negative labels. This phenomenon is prevalent in Western media.

However, more often than not, their judgments, which are apparently biased and misleading, eventually turn out to be incorrect.

Their latest assessments of China's economy follow a similar pattern. For instance, in two recent articles on The Economist's website, analysts were cited as warning about the possibility of the Chinese economy falling into a deflationary trap, suffering the "long COVID," or facing a "Lehman moment" in the near future.

So, is China's economic miracle over? The answer is definitely "no."

The Chinese economy, like the vast sea, is resilient and vibrant enough to overcome challenges at home and abroad, continue its growth, and serve as a major engine of the global economy, just as it has successfully done over the past four decades.

Even during the pandemic period from 2020 to 2022, the Chinese economy reaped an average annual growth of 4.5 percent, much higher than the world average of about 2 percent. China's GDP target of around 5 percent for this year is achievable despite external uncertainties. In the first half of this year, its GDP grew 5.5 percent year on year, a relatively robust pace compared to other major economies.

In its World Economic Outlook updated in late July, the International Monetary Fund forecast China's economy is expected to grow by 5.2 percent and account for one-third of global growth this year.

The pessimistic sentiment about China's economy is unwarranted and unjustified, and will only mislead investors and entrepreneurs when what the global economy needs most is confidence.

The "deflationary trap" theory about the Chinese economy is groundless. In the first half of the year, the consumer price index showed a 0.7 percent increase. The M2 climbed 11.3 percent year on year to 287.3 trillion yuan (40.02 trillion U.S. dollars) at the end of June.

None of these data support deflation. It is worth noting that deflation is characterized by a sustained decrease in the overall price level, a decrease in the money supply, and economic recession. China's CPI will see a U-shaped trajectory this year and will be close to 1 percent at the end of 2023, a central bank official said in July.

The CPI logged a 0.3 percent year-on-year decline in July, which was perhaps a major reason why Western analysts say China is slipping into deflation. However, the CPI decline was temporary and much due to the impact of food supply release, while demand indicators, such as core commodity CPI and core service CPI, rebounded strongly.

The "long COVID" certainly cannot befall the world's second-largest economy. Policies aimed at boosting the private sector have been enacted and are yielding positive outcomes. The number of private enterprises involved in foreign trade in the first seven months reached 478,000, an increase of 8 percent year on year, with private firms contributing nearly 53 percent of China's total foreign trade in this period.

In the first five months, 3.76 million private enterprises were newly established in China, up 17.2 percent year-on-year and 6.5 percentage points faster than the first quarter. The country's registered private enterprises reached 50.93 million at the end of May.

Consumer spending is also encouraging, as consumption contributed to 77.2 percent of economic growth in H1, up by 46.4 percentage points.

"This summer is the most active period in the tourism market in the past five years," said Dai Bin, president of the China Tourism Academy. The country saw 1.8 billion domestic tourist trips, raking in tourism revenue of 1.2 trillion yuan during the summer travel period. The majority of domestic destinations hosted a record-high number of tourists.

China's economic growth is moving in the right direction as consumer spending picks up, Chris Torrens, vice chairman of the British Chamber of Commerce in China, recently told Bloomberg Television.

Other bright spots also speak volumes about China's economic resilience. Between January and July, investment in high-tech industries increased by 11.5 percent year on year. In the first half of this year, the combined export of electric cars, lithium batteries, and solar panels increased by 61.6 percent year on year.

Business performances are improving. The operating revenues and net profits of firms listed on the Shenzhen Stock Exchange (SSE) grew by 12.3 percent and 10.54 percent respectively in the second quarter, compared with the first quarter, the exchange said.

China's economy has been recovering and generally moving on an upward trajectory. It will continue to be a major anchor of global economic growth. With a solid foundation already laid in H1 and new measures taking effect, China is able to effectively tackle the difficulties and challenges and achieve this year's goals of social and economic development.

An isolated and prejudiced perspective on China is destined to crumble. As China advances its modernization drive, it will remain a thriving source of hope and opportunities for the development of other countries.