Containers await shipping at a port in Xiamen, Fujian province. [Photo by Wang Xieyun/China Daily]
BEIJING -- Is the threat of global stagflation getting real? Can the Chinese economy resist the mounting downward pressure and continue to power a more sustainable global recovery as it did in the 2008 global financial crisis?
These concerns were raised by world leaders, business tycoons and scholars at the 2022 Annual Meeting of the World Economic Forum (WEF) amid the whirlwind of challenges like the COVID-19 pandemic and the Ukraine crisis overcasting an already lackluster global economy.
Against such a backdrop, the Chinese economy has also encountered headwinds in recent months as the COVID-19 resurgence weighed on some metropolis like Shanghai and Beijing. To weather those challenges, the Chinese government has been trying to coordinate epidemic control with economic and social development in an efficient way.
The Qiushi Journal, a flagship magazine of the Communist Party of China Central Committee, published last week an article by Chinese President Xi Jinping, in which he said that since the 1990s, China has successfully responded to major tests such as the Asian financial crisis, the international financial crisis and the COVID-19 pandemic.
Xi also admitted risks in China's economic and financial sectors, but said they are under control, while expressing his confidence in the sustainable and healthy development of the Chinese economy.
Targeted measures
Thanks to relentless hard work, China is witnessing a steady decline in its recent COVID resurgence. In Shanghai, after several months of a tough fight, the megacity of 25 million declared on May 17 that all its 16 districts had cut off community transmission. Now the metropolis is gradually reopening commercial outlets, with the resurgence largely under control.
To resume production and shore up growth as well as confidence, the Chinese government has acted with no delay. It has rolled out a sweeping package of targeted measures, including increasing tax refunds, providing subsidies to encourage employment and extending financial support to micro and small businesses.
On May 15, a ship loaded with over 4,000 electric cars produced by Tesla's Shanghai Gigafactory left for Belgium. This is the second export shipment of Tesla cars from Shanghai since the factory resumed production on April 19.
All four factories of US manufacturing company 3M in Shanghai have also resumed production.
"It's so wonderful to be back at this familiar store and reconnect with the community and customers again by making cups of coffee," said Sheng Li, the manager of the Starbucks store on Shanghai's Huaihai West Road.
As of Monday, nearly 20 Starbucks stores in Shanghai's 12 districts had reopened, covering downtown and suburban areas. Sheng said she has been fully occupied these days as expected.
Despite downside risks, China has the policy space and capacity to respond to economic shocks, World Bank East Asia and Pacific Chief Economist Aaditya Mattoo told Xinhua.
Fundamentals unchanged
In a recent press release, Fu Linghui, spokesperson for China's National Bureau of Statistics, said that "the fundamentals of the Chinese economy remain unchanged. The overall trends of economic transformation and upgrading and high-quality development remain unchanged."
Despite the downward risks, the Chinese economy remains resilient with a super-large market, complete industrial and supply chains and huge domestic demands.
China announced last year its victory in building a moderately prosperous society in all respects. The country boasts the world's biggest middle-income group -- 400 million people, offering tremendous potential for its own and others' businesses.
Moreover, it is the only country in the world to obtain all the industrial categories listed in the United Nations industrial classification. Among the world's more than 500 major industrial products, China ranks first in output at over 220.
When the pandemic was at its height, it was China that quickly brought the disease under control, and restored the previously disrupted global supply chains. According to Bloomberg, China ensured "that everything from iPhones and Teslas to fertilizer and car parts continues to flow to the rest of the world."
"China is the world's largest manufacturer with the most comprehensive and resilient supply chain system, which has helped China's economy recover rapidly after the outbreak of the COVID-19 pandemic," said Jerry Zhang, CEO of Standard Chartered Bank (China).
China is also building new fundamentals for future growth. The country's drive for stronger innovation capabilities provides solid support for fostering a new development paradigm and achieving high-quality development, which are key components of "Xiconomics," the Chinese president's economic philosophy.
In 2021, China's spending on research and development hit a new high of 2.44 percent of its GDP, amounting to about 2.79 trillion yuan (about $441.13 billion) and ranking the second in the world.
China's economy boasts excellent potential and resilience, said Swiss banker Fiorenzo Manganiello, adding that China can withstand downward pressure and risks and has the confidence to stabilize the macroeconomic market, which is "very important to global investors."
Common prosperity
In the first four months this year, China's exports grew 10.3 percent year on year to 6.97 trillion yuan (about $1.04 trillion), while imports rose 5 percent. Over the same period, foreign direct investment into the Chinese mainland, in actual use, expanded 26.1 percent year on year to $74.47 billion.
These numbers testify to just how closely China and the rest of the world are connected in terms of trade and commerce, as well as in the need to promote shared development globally.
As Xi has noted, China's growth aims to realize common prosperity in the country and shared development beyond its border.
To realize common prosperity, China should first "make a bigger and better cake" through the joint efforts of its people, and then divide and distribute the cake properly through rational institutional arrangements, Xi said in his Qiushi article.
China is steering its economy with a new development philosophy and paradigm that features innovative, coordinated, green, open and shared growth, and puts more weight on the domestic market while developing the overseas one.
To turn global awareness into collective action, China has been translating Xi's vision for common development into cooperation frameworks such as the Belt and Road Initiative and the Global Development Initiative which have earned support from countries and organizations across the world.
Addressing the conference of the 70th anniversary of the China Council for the Promotion of International Trade and the Global Trade and Investment Promotion Summit, Xi underlined China's commitment to the WTO-centered multilateral trading regime, pledging to "ensure security and stability of the global industrial and supply chains, and make the 'pie' of cooperation bigger to allow development gains to better trickle down to people of all countries."
Xi's renewed commitments to global cooperation injected a dose of certainty into this uncertain world.
Standard Chartered "is very optimistic about China's long-term development prospects and will continue its investment in China," Zhang said, citing the group's decision to invest $300 million into China-related business in the next three years.
Manganiello, the Swiss banker who hailed the Belt and Road Initiative and the Regional Comprehensive Economic Partnership as "powerful engines for the recovery of the global economy," also said he believes that China will continue to promote globalization and regional economic integration.
In the face of the COVID-19 pandemic, China's economic growth faces some short-term challenges, but the Chinese government is taking measures such as expanding domestic demand, reducing export dependence and cultivating high value-added industries to ensure economic growth, said WEF President Borge Brende.
"So for long and medium term, I'm quite bullish on China's economy," Brende added.