Dancing With Wolves: The United States Intends To Upgrade Economic And Trade Frictions. China's Economy Is Not Afraid Of Stress.

In the past two days, the United States launched a "multi barrel mode" and introduced a number of measures to undermine Sino US trade and financial cooperation, including: on the morning of August 2nd, the US announced that it would impose 10% tariffs on 300 billion US dollars in China's exports to the United States in September 1st. In the morning of August 6th in Beijing, the United States accuses China of being a manipulator of the currency manipulation. "Beijing" Affected by this, the US stock market and China's stock market both fell sharply.


In this situation, what should China do? Can China's economy and stock market resist these pressures?


First of all, we must realize that trade war is unpopular after all, and that trade bullying and unilateralism are not sustainable.


Under the circumstances of economic globalization, countries are participating in the global industrial chain according to their comparative advantages, sharing profits and taking risks at different stages of the value chain. At the same time, the economies of various countries will also grow with the allocation of global resources. This is a great logic. If conflicts of interest or other problems need to be solved, they can be negotiated and resolved under multilateral mechanisms such as WTO or bilateral negotiations.


Since the United States unilaterally launched the trade war in March 2018, the two sides have conducted repeated negotiations and have reached some consensus. However, the US side has shown a bullying attitude from time to time, taking unilateralism measures to undermine the atmosphere of bilateral consultation. Several recent measures have been intensified.


The US side adopts various ways of pressure to try to force China to accept its unreasonable demands beyond the scope of bilateral trade, which is impossible for any sovereign state to accept. We should see that a series of trade protection measures adopted by the United States, which violate World Trade Organization rules, undermine the multilateral trading system, seriously disrupt the global industrial chain and supply chain, and bring disaster to the global economic recovery and growth, are unpopular.


What China needs to do is to clarify the facts, continue to strive to resolve differences through negotiations, and adhere to the necessary struggles. Two, we must firmly stick to our own affairs, maintain steady economic development, and continue to actively expand the scope of opening up. China is on the side of justice, and trade bullying and unilateralism cannot be sustained.


Second, we must recognize the sustainability of China's economic growth and deal with the resilience of external pressures.


Since the founding of new China, after 70 years of continuous efforts, especially the rapid development of reform and opening up for more than 40 years, it has grown into the second largest economy in the world, manufacturing, trade in goods and foreign exchange reserves. China has nearly 1 billion 400 million people, 900 million labor force, 170 million highly educated and skilled human resources, the world's largest middle-income group and more than 100 million market players. These market resources are valuable and also have great potential.


China's economy has entered a stage of high quality development. Growth is mainly driven by domestic demand. In 2018, the contribution rate of domestic demand to economic growth reached 108.6%, of which the final consumption contribution rate reached 76.2%. China's R & D investment ranks second in the world, accounting for about 2.18% of the total economy, and the new dynamic energy represented by strategic emerging industries and sharing the economy is growing. In 2018, the total economic volume of China crossed the 90 trillion yuan mark, and the growth rate was 6.6%. In the first half of 2019, the growth rate was 6.3%. The contribution rate of China's economic growth to the world economy has been maintained at around 30% for many years.


We also have the institutional advantage of socialism with Chinese characteristics and the national spirit of unified will to overcome difficulties. We can concentrate our efforts on major events, have great development tenacity, potential and room for maneuver, and have rich experience in macro-control and adequate policy space.


The global position of China's economy has been formed. Even if the US side puts pressure on it, it can not stop China from continuing to develop. Over the past 40 years since reform and opening up, China's economic and trade ties with other countries have become increasingly close and increasingly extensive. As a responsible trading power, China has a growing circle of friends. Moreover, the pressure on the US side is not sustainable.


Third, we must fully understand the basic law of the international economic order.


In fact, even if this trade war does not take place, there has been a discord in the international economic system. The US side's massive trade war has only increased the tone of the dissonance. It is a long and arduous task to establish a new international economic order.


The western developed countries' technological blockade of developing countries is not new and has a long history. In November of 1949, under the proposal of the United States, 17 western countries as member states formed the "Paris Co ordinating Committee", namely the "output control CO ordinating Committee". The aim of the organization is to restrict the export of strategic materials and high technology to 30 developing countries.


In the late 80s of last century, there were some major changes in the international political and economic situation. The western developed countries urgently needed to open up new markets. Therefore, GATT continued to expand and formed WTO until 1995. The gradual decline of "Batumi" was announced in April 1994. However, in July 1996, the 33 western countries signed the "Watson agreement" (also called the Watson arrangement mechanism). Instead of "Batumi", they continued to impose technical blockade on developing countries such as China, and the United States was the leader.


As we all know, after China became a member of WTO in 2001, the United States repeatedly said it did not recognize China as a market economy country. While WTO is pushing forward the multilateral trade process, unilateralism and protectionism that are contrary to the tenet of WTO have not disappeared, and the game between countries has always existed.


In the face of the discordant factors in the international economic system, China advocates cooperation and win win, involving all of our affairs being discussed by all countries. We will continue to adhere to the principle of equal consultation and win-win cooperation. We must strive to resolve differences and contradictions, and also be confident that we will face difficulties and make progress.


The development of any country will not be smooth sailing. There will inevitably be difficulties, obstacles and even stormy waves. Economic globalization is also twists and turns, and will encounter different contradictions and difficulties in different periods. In the era of globalization, China's economy and China's stock market should absorb both favorable and unfavorable factors from all sides, and insist on doing their best at all times.


Comparatively speaking, the reform of China's capital market is lagging behind the development of the whole economy. No matter in the market downturn or in the active period, we must adhere to the reform direction of marketization, rule of law and internationalization, and carry out the basic system construction of the market. In the near future, we should make full use of the opportunity of building the science and innovation board, consolidate the responsibility of the main body of the market, stimulate the vitality of the market players, create a good market ecosystem, and strive to create a standardized, transparent, open, dynamic and resilient capital market.


As long as we stick to the direction, maintain our determination and persevere in our work, we will be able to overcome our immediate difficulties and open up a broader new field of development.