China remains crucial engine for global growth

0 Comment(s)Print E-mail China Daily, September 3, 2023
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Some analysts and economists in the United States have said in recent months that China's growth engine is sputtering, with likely adverse consequences for global development.

In response to these opinions, China's top envoy in Washington published an op-ed in The Washington Post on Thursday, titled "The Chinese economy is doing better than you might think".

Xie Feng, Chinese ambassador to the US, said in his article that the country's growth rate has outpaced most major economies, and China remains a highly important engine of global growth as it has for many years.

Citing BCA Research, Xie said China has been the source of more than 40 percent of global growth over the past decade, compared with 22 percent from the US and 9 percent from the eurozone.

He also said some people have dismissed China's contribution to global growth, or even hyped the "threat" from a growing China for many years.

"Now, as China is undergoing temporary economic adjustments, some blame China for dragging the global economy down; others advance the 'China may collapse' theory. Is this fair?" Xie wrote.

"In a globalized era, bad news for anyone is bad news for all. Countries need to pull together to advance economic globalization and build a community with a shared future for mankind where no one is left behind."

The Chinese government has "ample room" in its policy tool kit to forestall systemic risks, Xie said. For example, it has rolled out new policies to reinvigorate consumption, boost the private sector and attract more foreign investment.

"One of our priorities is to prevent and defuse financial risks, including policies to ensure the steady and sound development of the real estate sector. Such efforts are gradually paying off," he wrote.

Though transnational investment globally is lackluster, foreign investment in China continues to grow.

Western investment

France, the United Kingdom, Japan and Germany boosted investment in China in the first half of this year by 173.3 percent, 135.3 percent, 53 percent and 14.2 percent, respectively.

In particular, half of Tesla's global deliveries came from its Shanghai gigafactory last year, which rolls out one electric vehicle every 40 seconds. And Starbucks now operates more than 6,500 stores in China, opening one nearly every nine hours.

"As China continues to upgrade consumption, ease market access, optimize the business environment and strengthen supply and industrial chains, the fundamentals sustaining its long-term growth remain unchanged," Xie said.

On Aug 11, The New York Times' "China's Stalling Economy Puts the World on Notice" report said that as China's economy showed flashes of decline, such as slowed growth in the spring and contracted exports in the second quarter, the consequences pose perils globally.

Despite gloomy assessments of the Chinese economy in Western media, there are also discussions about looking at China's economy in perspective.

In a column in the Financial Times on Sunday, Louis-Vincent Gave, chief executive of China-focused economic consultancy Gavekal, noted that markets are not signaling doom and gloom for China's economy, and financial price moves are telling a different story as opposed to some of the more pessimistic forecasts.

Gave looked at the performance of banks. As in most financial crises, the share-price performance of banks starts signaling trouble months before a systemic crisis unfolds.

But over the past 12 months, Chinese banks have actually outperformed US banks by 12.6 percent in dollar terms.

"So what does one call an emerging market systemic financial crisis in which local banks are up on the year and outperforming US banks by double digits?" Gave wrote.

In an Aug 24 analysis before US Commerce Secretary Gina Raimondo's visit to China, CNN reported that a stable Chinese economy is also in the US' interest. It added that US companies have huge manufacturing networks in China and rely on Chinese consumers.

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