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Confidence in Chinese economy

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The skyline of Shanghai’s Lujiazui financial district. China registered 3.2 per cent year-on-year growth in the second quarter of the year, versus a 6.8 per cent contraction in the first quarter. AFP

Confidence in Chinese economy

Trade protectionism and geopolitical tensions, as the International Monetary Fund warned in a report it released on Wednesday, may jeopardise the global recovery.

Facing such complicated and precarious international environment, China must be forward-looking and make as thorough preparations as possible for all foreseeable eventualities.

So while continuing to implement policies to promote employment, production and consumption, policymakers should avoid overusing monetary and fiscal policies so they leave themselves some policy room if needed.

With this in mind, some financial officials have hinted that the authorities could withdraw the unusual monetary stimulus adopted in the first half of the year. Although the strong second quarter performance would have not been possible without the timely and accommodative monetary and fiscal policies adopted by the central authorities, a flexible policy stance would put China in a better position to handle any contingencies in the coming months regardless of how the domestic and international economic situation evolves.

China registered 3.2 per cent year-on-year growth in the second quarter of the year, versus a 6.8 per cent contraction in the first quarter, indicating the world’s second-largest economy has a solid base for further expansion in the second half of the year.

In the first two quarters combined, China’s GDP contracted by 1.6 per cent on a yearly basis, according to data released by the National Bureau of Statistics on Thursday. This impressive second-quarter performance beat general market expectations and showed that the Chinese economy is on a steady recovery track of having got an initial grip on the spread of the novel coronavirus in the country.

As the effect of those policies continue to unfold, they will help support China’s economic activities in the second half of the year.

But with the Covid-19 pandemic running wild in other parts of the world, global economic and trade activities in the second quarter will remain subdued, which will adversely affect Chinese exports and foreign investment in the country. Nonetheless, confidence in China’s prospects remains high.

Responding to a letter he received from representatives of the Global CEO Council, Chinese President Xi Jinping said that he appreciated the firm confidence they expressed in China’s development and their commitment to staying rooted in China. He thanked them for their constructive suggestions on China’s economic development, and pledged that China will keep deepening reform and expanding opening-up.

Telling them that they had made the right choice to stay in China, he stressed that the country will improve the business environment for Chinese and foreign enterprises and foster new opportunities and create new prospects for them.

Editorial/China Daily/Asia News Network

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