(JIN DING / CHINA DAILY)
The global economic situation is extremely grim and likely to further deteriorate. Despite that, the Chinese economy, resilient as it is, has been growing at a relatively stable rate.
The global economy has not bottomed out since the subprime mortgage crisis broke out in the United States in 2007, leading to the global financial crisis. This factor along with the rise of de-globalization sentiments in developed countries has disrupted global economic cooperation.
Worse, the US' large-scale fiscal and monetary policy aimed at overcoming the impacts of the COVID-19 pandemic has greatly exacerbated the global economic imbalance. For instance, the US is exporting inflation across the world. In May, the US consumer price index rose 8.6 percent year-on-year, the highest in 41 years, while in the eurozone the CPI reached 8.1 percent, a record high. Inflation is also rising in emerging markets, with countries such as Turkey, Argentina and Sri Lanka battling hyperinflation.
In its latest economic outlook report, the Organization for Economic Cooperation and Development lowered its forecast for this year's global growth to 3 percent from 4.5 percent, while the World Bank said global growth will likely fall from 5.7 percent in 2021 to 2.9 percent in 2022, warning of the danger of global stagflation.
Worse, both the US and the European Union, the top two importers of Chinese goods, are in danger of falling into economic recession.
The interest rate hikes (along with the shrinking of balance sheet) by the US Federal Reserve have further worsened the global financial environment, leading to the depreciation of other countries' currencies and damaging China's foreign trade environment.
But the more difficulty Washington faces, the more hostile it will become toward Beijing. It mobilized 14 countries on May 24 to launch the "Indo-Pacific Economic Framework for Prosperity" with the aim of checking China's rise, and US President Joe Biden proposed to build a partnership for economic prosperity in the Americas while speaking at the Americas Summit on June 8, which he bluntly said was aimed at countering China's influence.
Although China's external environment has been worsening, the country has handled the situation well because it had prepared in advance to deal with such eventualities. Since 2013, it has helped launch global cooperation programs such as the Belt and Road Initiative and institutions like the Asian Infrastructure Investment Bank. And it adopted the "dual circulation" development paradigm, which allows the domestic and overseas markets to reinforce each other, with the domestic market as the mainstay, and inked the Regional Comprehensive Economic Partnership agreement in 2020.
That China has a comprehensive modern industrial system, comprising 41 large industrial categories, 207 medium ones and 666 small ones, has also helped it offset the impacts of the trade war launched by the US and declining global demand. In fact, China is the only country that has all the industrial categories listed in the International Standard Industrial Classification of All Economic Activities.
In the past 10 years, China's industrial added value has grown at an average annual rate of 6.3 percent, compared with the global average of about 2 percent. Also, China has maintained its strong competitiveness in the global industry and supply chains. It is the largest trading partner of more than 120 economies, and the largest exporter to more than 60 countries.
Besides, despite the complicated and challenging domestic and global situations, China's foreign trade grew in the first five months of this year, and the actual use of foreign capital in high-tech industries increased by 42.7 percent year-on-year, further boosting its competitiveness.
In addition, the government has enough policy maneuvering space. By the end of 2021, the US' debt-to-GDP ratio was 130 percent and Japan's 256.9 percent. In comparison, China's debt-to-GDP ratio was less than 70 percent.
In 2021, China's annual CPI increased by an average of 0.9 percent and in May 2022, its CPI increased by 2.1 percent year-on-year. Moreover, its producer price index fell for the seventh consecutive month and its real interest rates are higher than that in the US. China's economy is therefore expected to rebound in the second half of the year, which in turn will boost the value of renminbi.
Now that China has basically contained the sporadic infection outbreaks in some cities, production has resumed at an accelerated pace and prices have stabilized. Which means the economy will continue to grow steadily in the second half of this year, turning the unfavorable condition into an opportunity.
The author is a researcher with the Chinese Academy of International Trade and Economic Cooperation.
The views don’t necessarily represent those of China Daily.