economic – भारतीय रोज़ नई ख़बरें

Azerbaijan hoping to attract more Chinese investors amid closer economic relations

Azerbaijani people gather to celebrate Nowruz in Baku, capital of Azerbaijan, March 19, 2023.(Photo: Xinhua)

Azerbaijan hopes to attract more Chinese investors as the country is pursuing sustainable development and green transformation, as well as greater transport connectivity and other economic goals under the China-proposed Belt and Road Initiative (BRI), officials from Azerbaijan said at the Azerbaijan Investment and Trade Promotion Conference held at the Embassy of Azerbaijan in Beijing on Tuesday.

Over a hundred representatives from relevant departments, enterprises, and industry groups from both China and Azerbaijan attended Tuesday’s promotional event, focusing on areas including mining, agriculture, tourism, logistics and transportation, showing the diverse bilateral cooperation between the two countries.

Speaking at the event, the Ambassador of Azerbaijan to China Bunyad Huseynov said that Azerbaijan is China’s biggest trading partner in the South Caucasus and his country attaches great importance to the expansion of economic and trade relations with China.

The two countries are diversifying economic cooperation to various sectors including transport and logistics, agriculture, and other areas. “China’s advanced experience and technologies in the field of alternative energy are of particular interest to our country,” the ambassador said.

Azerbaijan was one of the first countries to support the BRI, which has become a key driver of economic and trade development not just with China but beyond. This joint initiative is not only an economic and communication project, but also stimulates the global economy by expanding relations between peoples, improving infrastructure, deepening trade relations, and strengthening transport and infrastructure projects, the ambassador said at the event.

Azerbaijan, located at the vibrant crossroads of Europe and Asia, offers numerous investment opportunities across various sectors, Zohrab Gadirov, deputy executive director of the Export and Investment Promotion Agency of Azerbaijan (AZPROMO), said at the event. More Chinese enterprises are welcome to invest in Azerbaijan for a win-win outcome, Gadirov said.

During his trip to China, Gadirov is hoping to build closer ties with Chinese businesses, as they are becoming increasingly important in the country’s economic development.

According to data from Azerbaijan’s State Customs Committee, China-Azerbaijan bilateral trade reached $3.1 billion in 2023, a year-on-year increase of 43.5 percent, with both imports and exports seeing double-digit growth. China remained Azerbaijan’s fourth largest trading partner.

China also became Azerbaijan’s second-largest source of imports for the first time, ahead of Turkey, and accounting for 17.5 percent of the country’s total imports.

In addition to the surging demand for goods between China and Azerbaijan, the country’s strategic geographical location also positions it as a critical transportation hub for the China-Europe freight train. The demand for the cargo train has seen a significant increase thanks to its competitive advantages as a reliable transportation tool, particularly following the Red Sea crisis, which resulted in a substantial extension of transportation time and costs for sea voyages.

Azerbaijan plays a crucial role in the trans-Caspian international transportation corridor, serving as a dynamic new market at the crossroads of Europe and Asia. It’s not only a vital node in the BRI but also a significant gateway for Chinese enterprises to access the markets of the Caucasus and the EU, said He Zhenwei, head of the China Overseas Development Association.

Since the beginning of this year, China has been the largest source of imports for Azerbaijan for two consecutive months, reflecting strong development momentum, according to He.

There is still room for further growth in trade between the two countries, He said.

Protectionism not the solution to addressing erosion of US competitiveness

Illustration: Xia Qing/Global Times

The Office of the US Trade Representative recently initiated a probe into China’s maritime, logistics and shipbuilding sectors, alleging China used “unfair, non-market policies and practices” to dominate those industries. This, coupled with the Biden administration’s new threat to impose high tariffs on Chinese-made aluminum and steel, is again escalating trade tensions between the world’s two largest economies.

The probe and threat bear the US’ often-used hallmark of leveraging protectionism to resist free trade in Washington’s hope to protect its own industries and jobs. However, the competitive edge held by Chinese industries is due to the hard work and effort of the Chinese people, the persistent technological innovation of Chinese companies and their proactive participation in free market competition.

China’s world-leading telecom equipment, high-speed trains, solar panels, and electric vehicle manufacturing, as well as its maritime, logistics and shipbuilding sectors, have gradually built up their strength through many years’ expertise and Chinese enterprises’ willingness to incorporate new tech breakthroughs and domestically developed software solutions.

Now, high-quality and less costly goods manufactured by Chinese companies are becoming increasingly popular across the world. Chinese technologies, such as 5G and green renewable energies, are helping the Global South develop their economies. Therefore, the American politicians’ old playbook of using unilateral economic coercion to suppress and stymie the advance of Chinese economy will ultimately fail. Their desire to prolong or perpetuate American industrial dominance in the world will not come true, either.

As known to the world, protectionism and unilateralism won’t bring back the lost manufacturing jobs to US shores. America’s high labor costs and the Federal Reserve’s insistence on an elevated interest rate of over 5 percent mean that American manufacturers can hardly compete with their Chinese counterparts. The cost-effectiveness of Chinese companies is nearly unparalleled in the world. For example, the cost of making an electric vehicle in China is approximately two times lower than in the US.

The Biden administration remains obstinate in playing the zero-sum game by implementing a policy the administration calls “small courtyard with high walls” to demarcate itself or decouple from China. It is odd to many in the world why the US stubbornly refuses to choose the road of win-win cooperation with China. Is it just to prolong America’s dominance and hegemony in the world?

America’s “decoupling from China” debate started about six years ago, and reached its climax in 2020. Over the past three years, the Biden administration has not tempered the decoupling or “de-risking” rhetoric, even though it knows that this decoupling will disrupt global supply chains and fragment global economy, leading to undesirable efficiency losses among American companies as well.

To slow China’s economic growth, the US government, since 2018, has imposed high tariffs on up to $360 billion worth of Chinese goods, roped in its allies and “like-minded” countries to form exclusive trading blocs in key industrial sectors, pushed its businesses to relocate manufacturing operations away from China and blacklisted over 1,000 Chinese companies and research institutions. These trade barriers will hinder advancements in the world’s sustainability agenda, which relies on unrestricted and seamless exchanges of both existing and emerging technologies.

In public, senior US officials, including Treasury Secretary Janet Yellen, professed disinterest in decoupling, but the Biden administration has pushed ahead with it in an attempt to isolate China and contain its rise. The US government has curbed Chinese investment in the US, banned imports of Chinese technology products such as solar panel components and 5G gear, and prohibited high-tech exports to China, including cutting-edge semiconductor chips and the tools to make them.

However, the two giant economies are so tightly intertwined that it is almost impossible for Washington to harm China without hurting itself, sometimes seriously. The US’ decoupling strategy will only stand in the way of improving its corporate efficiency. As global supply chains are threatened by the decoupling policy, companies are complaining about a less elastic, less efficient and increasingly costly supply of components needed for manufacturing. Ordinary consumers in the US and the West are angered by expensive goods combined with high inflation.

The economic consequences of decoupling, raising trade barriers, or the push for de-globalization by the US are becoming a growing concern for global policymakers. Economists have started to estimate the economic costs for the world economy. Recently, the International Monetary Fund (IMF) listed rising economic fragmentation and an increase in trade restrictive measures as trends that could harm the medium-term outlook for the global economy.

Facing the relentless restrictions imposed by the US in recent years, China didn’t choose to sit idle or throw in the towel. Thinkers and policymakers started to realize the risks of relying on foreign technology and instead focused on a strategic shift of great historic importance to decrease reliance on US technology and prioritize domestic research and innovation in order to safeguard China’s economic security. Additionally, China decided to further open its economy to businesses from all countries and expand sectors available to foreign investors.

In contrast to the US, which has retreated from global economic integration, China has emerged as a leading advocate for globalization, free trade and inclusive development. History shows that shutting out foreign competition will never lead to success in the long run. The US’ decision to build “high walls” to block Chinese goods and technology will not solve the underlying issues of inefficiency in its enterprises, leading to higher consumer prices and prolonged inflation for American citizens. Protectionism is not the solution to addressing the erosion of US competitiveness.

The author is an editor with the Global Times. [email protected]

China-US 4th meetings of economic and financial working groups signal ‘steady, phased progress’ in stabilizing ties

China US Photo:VCG

The economic and financial working groups of China and the US held their fourth meetings in Washington DC on Tuesday, shortly after US Treasury Secretary Janet Yellen wrapped up a high-stakes six-day visit to China last week, which led to new areas of consensus in the economic and financial fields. The meetings come ahead of US Secretary of State Antony Blinken’s reported visit to China.

Observers said the dialogue, adding to a flurry of growing interactions between Chinese and US senior officials since the beginning of the year, showed that both sides attach high importance to bilateral economic ties. It also sent a positive signal on “steady and phased progress” in stabilizing relations between the world’s two largest economies.

As production capacity appeared on the agenda, observers also warned against the US taking a “two-dimensional” approach to China — that is, to maintain the overall stability of bilateral relations yet relentlessly suppress China’s emerging industries. Lately, this has centered on a bizarre narrative that labels Chinese clean technology exports with the “overcapacity” tag.

While dialogue to some extent helps prevent trade tensions from veering into conflicts, the ball is in the US court to stop politicizing economic matters and get relations back to the right track, they stressed.

During the fourth meeting of the economic working group, the two sides engaged in “in-depth, pragmatic and constructive” dialogue on how to implement the consensus reached earlier by leaders of both groups, the macroeconomic situations of both countries and the world, as well as balanced growth, according to a statement on the website of China’s Ministry of Finance on Wednesday.

The Chinese side also expressed concern about US trade and economic restrictions against China and responded further on the issue concerning production capacity. They also discussed arrangements for future communication, and both sides agreed to continue their dialogue.

The meetings took place on the sidelines of the spring meetings of the World Bank and IMF.

With regard to the fourth meeting of the financial working group, the two sides engaged in discussions on topics including each other’s monetary policies and financial stability, cooperation in financial regulation, institutional arrangements in financial markets, anti-money laundering and counter-terrorism financing, and other financial policy topics of mutual concern, according to a statement on the website of the People’s Bank of China (PBC), the country’s central bank.

Some of those topics were the new consensus on balanced growth and financial cooperation reached during Yellen’s visit to China last week. The two sides also agreed at that time on future meeting arrangements for the working group.

Chinese observers said that the fourth meetings are parts of a regular communication mechanism between China and the US, building on the San Francisco vision reached by leaders of both countries last year. It also underscored that both countries put great emphasis on bilateral economic relations, which are consequential not only for each other’s development but also to the global economy.

“As the US presidential election nears, the Biden administration is being hit with many pressures at home and abroad. So he has an urgent need to maintain ‘dynamically stabilized relations’ with China,” Diao Daming, a professor at the Renmin University of China in Beijing, told the Global Times on Wednesday.

While continued discussions signify a positive momentum in bilateral relations, observers pointed out that Washington’s China strategy is “two-dimensional” as the US on the one hand looks to deepen economic ties with China, yet on the other hand, it has been relentlessly cranking up trade tensions to suppress China’s tech industries.

Talks on production capacity appeared in the agenda of the economic working group’s meeting, as Chinese officials intensively criticized the “overcapacity” fallacy hyped by US and EU politicians.

Observers said that the claim of overcapacity is another card Washington recently put on the table to target China, which laid bare its hegemonic mindset as it is nervous about the rise of China’s advantageous industries, from new energy and artificial intelligence, telecommunication to steel.

There are more signs of escalating trade tensions. US President Joe Biden will call for tripling tariffs on Chinese steel and aluminum on Wednesday when he speaks to union members in Pennsylvania, NBC News reported.

Analysts said that the reported move is another practice of targeting Chinese enterprises under the guise of so-called “overcapacity,” though chances could be high that it merely aims to score political points during the election campaign and won’t translate into reality.

Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times that China’s steel and aluminum exports to US were not very large, and the tariff hike, if carried out, would inflict more damage on the US global business credit and local manufacturers than to the China suppliers.

A fair and non-discriminatory perception of China lays the basic framework for further exchanges between the two countries, and only under such premise can the two sides identify more areas of cooperation and resolve controversies, analysts said.

During talks with Federal Chancellor of Germany Olaf Scholz on Tuesday, Chinese Premier Li Qiang stressed that the production capacity issue should start with economic laws and be viewed objectively and dialectically from a market viewpoint and a global perspective.

“Washington must bear in mind that Chinese exports are in line with WTO rules and the global trade pattern is determined by each country’s competitive edge,” Gao Lingyun, an expert at the Chinese Academy of Social Sciences, told the Global Times.

US Trade Representative Katherine Tai will tell lawmakers that the Biden administration is “taking a serious look” at US trade defense tools to deal with threats posed by China’s trade and economic policies, Reuters reported Tuesday.

Gao said that it is unlikely that a new tool will come out, considering the limited aces Washington holds. “It is also ironic that the US barks about ‘punishing’ China, which abides by WTO rules, with a tool that is set to be defiant to trading rules,” Gao added.

China’s tourism booms during Qingming Festival holidays, reflecting nation’s strong vitality and potential

Passengers line up to board a high-speed bullet train at a railway station in Nanjing, East China’s Jiangsu Province, on April 6, 2024, the last day of the Qingming Festival holidays. About 119 million domestic tourist trips were made during the holidays. Photo: VCG

China’s consumption market during the just-ended Qingming Festival holidays showed better-than-expected performance, underscoring the strong vitality and potential of the economy while injecting new momentum in driving stable economic recovery.

During the Qingming Festival holidays, lasting from Thursday to Saturday, ticket bookings for popular domestic scenic spots surged by 5-fold compared with the same period last year, noted a report from a Chinese online travel agency Qunar sent to the Global Times on Saturday.

About 119 million domestic tourist trips were made during the holidays, up 11.5 percent from the same period in 2019, according to the Ministry of Culture and Tourism. The trips were estimated to bring in 54 billion yuan ($7.56 billion) in tourist revenue, an increase of 12.7 percent from 2019.

Many tourists kicked off the holidays with short-distance journeys. Notably, Tianshui in Northwest China’s Gansu Province and Kaifeng in Central China’s Henan Province – which have become internet sensations lately – saw the amount of hotel bookings jump by 12-fold and 4.5-fold respectively, according to Qunar.

Crowds appeared across tourist spots in China as many struggled to reach their destinations. A Beijing resident surnamed Li told the Global Times that his family has to wait for about two hours to park the car at the Juyongguan section of the Great Wall in Beijing on Thursday because there are so many tourists.

According to film ticketing platform Maoyan, the box-office revenue has reached 823 million yuan for the holidays, surpassing last year.

The service sector now contributes to around 60 percent of China’s economic growth. The robust recovery of tourism, hospitality and transport sectors will boost the overall recovery of domestic consumption and contribute to stable economic recovery, Xu Xiaolei, a marketing manager at China’s CYTS Tours Holding Co, told the Global Times on Saturday.

The potential of the consumption market is set to be further unleashed during the upcoming May Day holidays, Xu said, noting the surge of China’s consumption market reflects the strong vitality and potential of the economy.

Stable recovery

In addition to the robust recovery in the cultural and tourism sectors, the country’s manufacturing purchasing managers’ index (PMI) posted better-than-expected result in March, indicating notable increase in internal demand.

Analysts said that the world’s second-largest economy got off to a good start in the first quarter of 2024, laying a solid foundation for achieving the pre-set annual GDP growth target of around 5 percent.

“Between January and March, China’s economic growth rate is expected to reach around 5 percent on a yearly basis, supported by a couple of factors including consumers’ increased willingness to spend, stable infrastructure and manufacturing investment as well as improved external environment,” Wen Bin, chief economist from China Minsheng Bank, told the Global Times on Saturday.

There are multiple aspects where Chinese authorities can step up efforts in the second quarter to bolster the upswing recovery of the economy, according to Wen.

This year’s Government Work Report outlined an array of measures to boost growth this year. According to the report, a proactive fiscal policy and a prudent monetary policy will be continued in 2024, and a series of tasks will be taken to modernize the industrial system and develop new quality productive forces at a faster pace.

Wen said the central bank is expected to strengthen efforts to enhance “precision and effectiveness” of monetary policies so as to inject new momentum to the high-quality development of the economy. On the one hand, efforts should be made to boost economic structure adjustment, economic transformation and upgrade and the transition of old and new momentums, while on the other hand, the authorities should better meet reasonable consumption and fund-raising needs with targeted measures, he said.

Cao Heping, an economist at Peking University, said he is optimistic about the country’s GDP growth rate in the first quarter. “The development of new quality productive forces has triggered the new driver of China’s development,” Cao told the Global Times, noting the country will remain the main driver of world economic growth in 2024.

Positive prospect

Driven by China’s stable economic recovery so far this year, foreign-funded companies have voted with their feet to briskly expand investment in China for unprecedented opportunities amid the country’s high-level opening up.

In January, US retail giant Costco Wholesale opened a new store in Shenzhen, Guangdong Province, which is the sixth Costco store on the Chinese mainland. The number of registered members surpassed 140,000 on the first day alone, setting a record globally, according to local media outlet Shenzhen Daily.

On March 21, US smartphone maker Apple inaugurated its largest retail store on the Chinese mainland in Shanghai, with Apple CEO Tim Cook opening the doors of the new store and welcoming Chinese consumers.

During a meeting with Chinese Commerce Minister Wang Wentao on March 22, Cook said China is an important market with a rich talent pool and innovation vitality, and a crucial supply chain partner for Apple. He reaffirmed that Apple is committed to a long-term development in China and plans to increase investment in China’s supply chain, research and development, and marketing.

In order to steadily promote high-level opening-up and make greater efforts to attract and utilize foreign investment, the General Office of the State Council issued an action plan on March 19. The action plan proposes 24 measures across five aspects, including expanding market access, enhancing appeal to foreign investment and fostering a level playing field.

The Chinese government is cultivating new quality productive forces, signifying the country is on the correct development trajectory, John Ross, a senior fellow at the Chongyang Institute for Financial Studies, told the Global Times in a recent interview in Beijing.

Based on observations and research over the past 30 years related to China’s economy, there is no reason why China cannot meet its 2024 GDP growth target, and undoubtedly, the country will remain the main driver of world economic growth as it has for the past 40 years, he said.

Foreign executives, officials bullish on Chinese economy in Boao, denying ‘Peak China’ rhetoric

Participants take photos at the permanent site of Boao Forum for Asia in Boao, South China’s Hainan Province, on March 27, 2024. Photo: VCG

During a panel discussion at the Boao Forum for Asia (BFA) Annual Conference, executives from foreign-funded enterprises and officials from international institutions said they remained bullish on China’s economic growth in 2024, noting that innovation, consumption and green development will constitute a new China story.

As the world’s second-largest economy and important growth engine for the world economy, China’s development has attracted much attention. The remarks by the participants at the BFA strongly denied the so-called Peak China rhetoric, as the country’s economy is on course to recover.

Jean-Pierre Raffarin, former French prime minister, said that China’s 2024 growth target of about 5 percent is good, and the world economy needs China’s growth, as well as its innovation.

Steven Barnett, the IMF’s senior resident representative in China, said that last year, China’s economy contributed one third of global growth, and its growth is beneficial to the world.

Every one percentage point rise in China’s GDP growth will drive an increase of 0.3 percentage points in the economic growth of other countries, so strong GDP growth in China is not only good for China, but also for the rest of the world.

Regarding this year’s GDP growth target, Denis Depoux, global managing director of Roland Berger, said that the figure is not important in itself, more important thing is the transformation that is represented underneath the 5 percent goal.

There are some main themes to the new China story: innovation, new quality productive forces, decarbonization and consumption.

This photo taken on March 25, 2024 shows the Boao Forum for Asia (BFA) International Conference Center in Boao, South China’s Hainan Province, is ready for the upcoming forum. The BFA Annual Conference 2024 will be held from March 26 to 29 in Boao, focusing on how the international community can work together to deal with common challenges and shoulder their responsibilities. Photo: cnsphoto

Multinational companies, which have benefited from China’s double-digit average economic growth rate in past decades, now eye more opportunities in the Chinese market, including industrial upgrading and green development, Depoux said.

Michele Geraci, former undersecretary of state at the Italian Ministry of Economic Development, told the Global Times that China’s economic growth has made a positive contribution to regional and global development.

He has observed that China is moving some of its manufacturing into other countries in Asia that may appear lower on the manufacturing chain and are still behind the development curve. This change is a win-win for both China and other Asian countries, the Italian scholar said.

While praising China’s huge achievements in the green economy, Geraci said that this is one of the key areas for future economic cooperation between Europe and China. He called for China-EU cooperation in the green transition.

“The other area for such cooperation is the development of infrastructure in third countries, such as in Asia and in Africa. In the developing markets of Africa, for example, China has a strong presence and European companies, including Italian ones, can bring complementary expertise,” said Geraci.

Since the beginning of this year, China’s economic fundamentals have continued to improve, and positive factors bolstering the economic rebound have accumulated and increased.

Figures from the National Bureau of Statistics showed that in the first two months, the value added of industries over the designated size grew by 7 percent year-on-year, retail sales rose by 5.5 percent, investment in the manufacturing industry increased by 9.4 percent, and total trade grew by 8.7 percent, ushering in a promising year.

“If China’s economy maintains a growth rate of at least 5 percent this year, it would be feasible to achieve a contribution rate of 30 percent or more to global economic growth, provided that the exchange rate remains relatively stable,” Tian Yun, a Beijing-based economist, told the Global Times on Thursday.

“If trade with the US follows the recovery seen in January and February, it would significantly boost the Chinese economy. In addition, residential consumption holds significant potential to support economic growth,” Tian noted.

If consumer spending and investment flourish, achieving a 5 percent growth rate this year is attainable, given ample market opportunities and robust production capabilities of China, Tian said.

Well calibration of fiscal, monetary policies to ensure 5% GDP growth in China

A view of the Lujiazui area in Shanghai Photo: VCG

A well-calibrated fiscal and monetary policy combination, being crafted and orchestrated by Chinese government, will help resolve the intrinsic problems hidden in China’s economy. An aggressive fiscal stimulus, coupled with proactive while prudent monetary policy, is generally thought to provide the economy with sustainable energy, shepherding it to grow by around 5 percent in 2024.

Independent economists of many international organizations give high marks for Chinese economic policymakers’ learning and wit in blending the monetary and fiscal policies in the past four decades to shore up rapid economic growth, and at the same time successfully resisted the cyclical pressures of inflation and deflation.

Entering 2024, China’s economy has to overcome the “scar effect” left by the COVID pandemic, including a relatively lackluster domestic consumption and a churning real estate market. Amid the lingering concern about another public health upheaval, the people now tend to snap shut their pocketbooks, and the millennials and generation Z are increasingly hesitant to raise children.

Under these circumstances, the traditional days of steadily growing consumer prices are gone, as China witnessed several months of negative CPI growths in the second half of 2023. To deal with the deflationary pressure, China’s central bank moved to reduce the bellwether loan prime rates (LPR) of both one-year and five-year lengths. Last month, the central bank went aggressive, cutting the five-year LPR by a full quarter percentage, which also has the effect of ramping up the country’s humdrum housing sales as mortgage rates are slashed too.

Meanwhile, the policy-makers decided to introduce proactive fiscal stimulus measures to fuel up public spending and economic growth.

In 2024 alone, at least 4.9 trillion yuan of central and provincial government bonds will be sold, with the proceeds to be channeled to building up important public infrastructure projects and fostering new quality productive forces to meet China’s massive market demand for home-grown advanced semiconductor chips, newest AI and algorithm innovations, nationwide 5.5-G mobile network coverage and highly efficient digital business platforms – able to catapult China’s economy to new heights of growth before 2050.

China is determined to “choose transition from high rates to high-quality of growth,” said International Monetary Fund Managing Director Kristalina Georgieva at the just concluded China Development Forum held in Beijing. In her speech to the event, she remarked that China has entered a new era of economic growth, and the country will continue to be a key driver of and a contributor to global economic growth in the coming years.

And, renowned US economist Nicholas Lardy, senior fellow at the Peterson Institute for International Economics and a former senior fellow at the Brookings Institution, told Chinese media that it is unwarranted for many media pundits in the West to disseminate the narrative that “China’s economy is collapsing” and faces a catastrophic outcome. Instead the economy is recovering, and last year’s 5.2 percent GDP growth “is impressive” among major economies.

For a long time, one of the important reasons why the Chinese economy has been able to scale new heights constantly by overcoming domestic difficulties and withstanding external headwinds is its deep understanding of economic laws, and the decision makers’ creative ways to exploring new and potent growth drivers, as well as the country’s firm determination to implement systemic restructuring, such as the country’s unswerving focus on developing clean renewable energies and battery-powered electric trucks and cars.

Georgieva thought highly of China’s green development. She described China as a global leader in deploying renewable energy with enormous potential, adding that China was making rapid progress in green mobility. China’s remarkable development success has delivered tremendous benefits to hundreds of millions of people in the world, she said.

Georgieva said that China’s high-quality development still has a bearing to deepening marketed-regulated reforms and giving priority to private sector growth. Deep structural reforms can enhance the conditions for entrepreneurship, innovation and economic performance. For example, a boost to government finances at the macro level could allow some tailored micro changes in taxation policies on businesses to foster fast growth of new enterprises, aligned with the central bank’s monetary policy to increase liquidity through reserve ratio reductions and interest rate cuts.

And, ramped-up government spending is a key component of aggregate demand that can be strategically important for economic development. China’s central government has announced the issuance of new ultra-long special treasury bonds in each of the following several years to focus on funding major national projects. No matter it is the development of industrial parks, transportation hubs, public services and highly educated and skilled Chinese work force, government spending is indispensable to underpin the growth of future strategic industrial lines.

The drivers of demand include household consumption of goods and services, private investment, government investment and net exports. As to augmenting China’s domestic consumption – a pivotal part of economic growth, the government has pledged to implement a national drive to provide incentives to encourage trade-in of old household appliances, cars and furniture with new models. The replacement of old automobiles, inefficient in fossil fuel use and polluting the air, with Chinese brand-new electric vehicles will also significantly help improve China’s urban environment. And, Chinese local authorities are encouraging citizens to have more family outings and leisure time to increase cultural and tourism spending.

Regarding foreign trade, despite the headwinds of geopolitical tensions which are affecting trade and capital flows, China saw a robust take-off of foreign trade in the first two months this year, largely thanks to the high-quality and low-price of made-in-China goods, like heavy machinery, home appliances, electric cars and a wide variety of electronic devices. In 2024, China’s total exports of goods will likely grow by 6-8 percent over 2023. Investment, domestic spending and export will guarantee the economy to expand by around 5 percent this year.

IMF head Georgieva said she is confident that China and the world can tackle the challenges this globe is now facing and they can always cooperate to create a more prosperous future in this century.

The author is an editor with the Global Times. [email protected]

China’s commitment to innovation shines bright on quality development: Nobel laureate Edmund Phelps

An employee inspects a cellphone chip at an electronic product research and development company in Ningbo, East China’s Zhejiang Province on February 22, 2024. The company’s products are exported to more than 80 countries in Europe and Latin America, and its overseas order book is full through the second quarter of 2024. Photo: VCG

Editor’s Note: China’s economy is undergoing a critical transformation toward quality growth. During the process, there are many pessimistic views from Western media about China’s economy. However, China has maintained stable growth despite challenges and reaffirmed its commitment for promoting innovation and high quality economic development. How should we objectively observe China’s economic transformation? Nobel Laureate, Professor Edmund Phelps, author of books Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change and The Logic of Growth, shared his perspective with the Global Times.

GT: China’s economy is undergoing a critical transformation toward quality growth. How do you perceive the role of innovation in China’s economic growth?

Phelps: The generation of innovation is the main driving force behind China’s economic transformation and upgrading. For China’s economy to further the transition toward high-quality development, there is nothing more important than achieving a higher level of independent innovation.

China used to produce products innovated by other countries, but that has changed with the emergence of corporate giants like Alibaba, Tencent, and ByteDance. China has achieved admirable innovation-driven development in both emerging and traditional sectors including finance, artificial intelligence, and bio-tech.

Currently, China’s independent innovation keeps improving for a few reasons. First, Chinese enterprises are actively studying foreign products and methods, which inspire them to create new products and methods. Second, with the increase in wage levels, Chinese exporters need to develop new products and technologies in order to survive. Third, the level of education has increased, allowing more people to benefit from the new economy. Fourth, local governments have become more supportive of policies that support independent innovation.

GT: The growth of exports of the “new three items” in China’s foreign trade has surpassed 1 trillion yuan in 2023. China has cultivated around 400,000 high-tech enterprises. China’s number of intelligent factories ranks first in the world. How do you view these breakthroughs? How do you view China’s progress and advantages in promoting innovation?

Phelps: For a long time, people have believed that sustained growth and development require continuous innovation. Since the reform and opening-up, China’s innovation mainly relied on imports, but in the past decade, independent innovation has become very important. China can introduce foreign innovative products at an acceptable cost, but it should also shift its focus toward independent innovation.

In recent years, it has been crucial to shift from “Made in China” to “Innovated in China.” This kind of technological progress is needed to enhance productivity and consequently increase wage levels. No one can predict the contributions of leading innovative Chinese enterprises to the global economy, but I believe they will make significant contributions to the global economy.

There is evidence now that a large number of Chinese people have the ability to innovate. Data on independent innovation in China and G7 countries shows that China was already ranked fourth in the 1990s. In the following decade, the rankings of the UK and Canada declined, with China rising to second place, not far behind the US.

Currently, innovation from the US is much less than it was in the past, and there is almost no innovation coming from Europe. Therefore, China can become a major source of global economic innovation. This is a valuable opportunity for China to become a major leader in innovation.

GT: The 2024 Government Work Report is sending an important signal for high-quality development, emphasizing the acceleration of the development of new quality productive forces, actively nurturing emerging industries and future-oriented industries, as well as deepening the promotion of innovation and development in the digital economy. How do you view China’s commitment and potential in promoting innovation?

Phelps: China is currently making many high-tech innovations, and continuing to strive in this area is a wise move for the country. As time goes on, we will see what progress China makes in this regard.

China has taken various measures to promote innovation and entrepreneurship, such as significantly reducing the procedures for establishing new companies, building numerous schools, and facilitating the entry of foreign professionals into China. Equally important is China’s recognition of the importance of allowing competition in the economy. There is clear evidence that China is moving toward the path of entrepreneurship and innovation. The government has reiterated its determination to protect new patents and it is well known that China registers a considerable number of new companies every week.

GT: How can China further unleash its innovative potential to boost its economy?

Phelps: If China wants to achieve great economic flourishing, it must provide extensive opportunities for innovation. The obstacles faced by China, the US, and Europe are the same. In order to continue driving economic growth and achieving mass flourishing, we need to address some fundamental issues, such as how to mobilize mass innovation and how to enable people to achieve self-development.

China needs to accelerate its pace of independent innovation by:

Cultivating entrepreneurs, who will find the direction for business development in a world full of uncertainty and use their abilities to solve new problems.

Cultivating innovative companies, which require imagination, curiosity, and deep insight into new trends.

China needs to change its perception of independent innovation. Innovation does not end with the conception of new products or methods; it requires the widespread application of these new ideas into commercially viable products or methods.

To achieve large-scale innovation, China needs to provide a suitable environment of incentive, establish necessary systems, and remove barriers to innovation. Only when the people are energetic can innovation occur, and the national economy can develop.

To achieve faster development, China needs to cultivate more scientists, and these scientists need to apply their research to the creation and commercialization of new products and methods. This is essential for increasing productivity.

GT: Some media claim that China’s economic growth is peaking, how do you view such opinions? Do you have confidence in China’s economic prospects?

Phelps: Since the reform and opening-up, China has improved productivity and wage levels in multiple dimensions. In the coming years, China will further enhance productivity and wages through grassroots innovation. As more Chinese people engage in innovation, the inclusiveness of the Chinese economy will inevitably expand, leading China toward economic prosperity.

China can certainly achieve a high level of economic prosperity through independent innovation. Almost the entire world is facing a shortage of innovation capabilities, with some countries experiencing this for decades. Most countries have not found a way out. Now, China is taking the lead in the path of mass innovation.

GT: China’s capacity to educate and attract human capital keeps improving, with the largest number of STEM graduates. How do you perceive this advantage contributing to the promotion of innovation?

Phelps: The current wage growth level in China has already been able to meet people’s basic material needs. People are beginning to highly value whether they are in an environment full of innovative spirit, and they are starting to pursue a sense of achievement through innovation. By shaping a vibrant innovative environment that stimulates people’s minds to think about a series of new issues, China will become a world leader in innovation.

GT Voice: Scapegoating China won’t resolve US economic woes

The hopeless fault-finder Illustration: Liu Rui/GT

Putting all the blame on China for economic problems in the US seems like an easy way for the Biden administration to pass the buck. However, the more that people in the US blame China, the fewer are actually working on a real solution. This is why the growing US tendency to shift blame onto Chinese manufacturing is a concerning sign.

US Treasury Secretary Janet Yellen said on Wednesday that when she next visits China, she would raise concerns that China’s excess production capacity may distort global markets and hurt jobs in other industrial and developing economies, Reuters reported.

Yellen is one of the Biden administration officials who have recently expressed concern about China’s overcapacity “flooding the market with cheap goods.”

But ironically, while she talked about the negative impact of excess capacity in China, a new study by the Federal Reserve Bank of New York suggested that China’s efforts to boost manufacturing and shore up the economy could put “meaningful upward pressure” on US inflation and push back the start of monetary easing, Bloomberg reported on Tuesday.

How could low-priced products from China’s “excess capacity” contribute to inflationary pressure in the US? If anything, this is a typical example of how the “blaming Chinese manufacturing” rhetoric of US officials and economic agencies is often contradictory and nonsense for anyone with basic economic understanding.

The illogical accusation against Chinese manufacturing shows that the US is quick to blame China for its own economic woes, while failing to acknowledge its own role in the matter.

The scapegoating only serves to divert attention from America’s own issues, and often leads to misconceived economic and trade policies, such as trade barriers and protectionism. This deters Washington from addressing the problems, while exacerbating inflation and market distortion.

Take the US inflation dilemma as an example. It is no secret that inflation has not yet reached a level where the Fed can be certain about cutting rates. It is not China’s fault, but America’s economic policy that is to blame for the problem. There is also no chance that the inflation problem can be addressed by suppressing China-made goods.

The Fed’s helicopter monetary policy during the pandemic and subsequent interest rate hikes have had serious consequences for the US economy, which have been directly reflected in the recent crises in the commercial real estate sector and US regional banks.

Moreover, trade-distorting practices with China are a significant factor contributing to high inflation in the US. The US initiated a trade war with China by imposing additional tariffs on imports of Chinese goods, leading to increased prices for low- and medium-end products. A 2021 report by Moody’s stated that US importers absorbed more than 90 percent of the additional costs caused by the increased US tariffs on Chinese goods.

Also, the US has promoted the concept of “decoupling” and “breaking the chain,” compelling companies to relocate their outsourcing operations, which only leads to higher costs of production, purchasing and operating.

Washington has shown growing protectionism to keep its domestic markets and protect jobs, which, however, has not improved industrial competitiveness but led to a spiral of workers’ wages and rising prices. The United Auto Workers strike is a prime example.

Fundamentally speaking, the root cause of the China-US trade imbalance is not that Chinese products are cheaper. There is nothing wrong in US demand for Chinese products, and the US can balance the trade account by exporting more high-end products to China and participating more actively in China’s economic development.

However, its trade policy toward China is aimed at severing this complementary relationship, which is detrimental to both sides.

A recent poll by the AP showed that 57 percent of Americans think the national economy is somewhat or much worse off than before Biden took office in 2021. This actually calls for policymakers to reflect on their economic and trade policy choices. Cracking down on China won’t make America’s economic problems disappear, but only lead to misguided policies that could exacerbate them.

Violations of the law of the market for political purposes will eventually be punished by the law of the economy.