By Liu Zhiqin Source: Global Times Published: 2018-9-10
Fresh statistics show that China's economy is in good shape, though many people are deeply concerned about the downward pressure that's been building since the beginning of this year.
US exports to China in July slid 8.2 percent to a seasonally adjusted $11.03 billion, while exports of Chinese goods to the US still rose. Overall export growth remained solid on the Chinese end. Some observers doubt the figures, but the trade war initiated by the US has begun to affect the US economy and will continue to affect the global market.
Another figure drawing attention was China's foreign reserves as of August, which fell slightly but appeared to be on a stable path for the coming month.
Exchange-rate volatility and the strong value of the US dollar in August mainly caused the dip.
It may be hard to stomach the idea that the economic situation in China, which has been going well, faces serious challenges. The structure of the economy will demand more attention from policymakers. These challenges have emerged in the real economy and services industries, while inflation pressure will have more effect on economic growth.
One thing to note is that the Chinese economy faces huge pressure from both international and domestic factors, both of which have changed a lot. Meanwhile, economic growth slowed in August. So it could be a good idea to set up a warning system that would provide warnings to regulators of looming crises.
Such a crisis warning system should include supervisory bodies and experts who constantly monitor and relay information to policymakers, who could take measures to keep the market stable and healthy.
It is certain that later this year, China's exports to the US will get a lift from seasonal demand for Christmas. Also, US importers are striving to source more goods from China before more tariffs take effect, and they prefer to stock up on imported goods to keep prices stable. That is why Chinese exports are boosted even under the threat of heavy tariffs. This counterintuitive scenario shows market operates in line with its own imperatives.
China's economic development will benefit world growth and remain the driving force of the global recovery.
It is noteworthy that the total value of China's exports has remained robust, increasing by 5 percent in the first seven months of this year. Further gains could be expected.
The increase of exports signals the potential for foreign reserve expansion in US dollar terms. The core policy of boosting infrastructure investment to maintain economic growth will not be sufficient to support the economy anymore. We need multiple powerful policies to keep up the momentum.
We anticipate that China will take more aggressive measures to deal with potential risks caused by international uncertainties.
The author is a senior fellow with the Chongyang Institute for Financial Studies at Renmin University of China.