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Home / Business / China US trade tensions

Chinese economy unfazed by trade war roller-coaster ride

Xinhua | Updated: 2019-08-20 16:20
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Containers carrying goods for export are seen in Qingdao Port, East China's Shandong province, on Oct 19, 2018. [Photo/VCG]

FUZHOU - After going through all the ups and downs of a trade war, Hong Jianku is convinced his early decision to explore new markets for his swimwear company amid US tariff uncertainties was the right one.

Back in July 2018, he started bracing his firm for possible prolonged rifts and then witnessed all the u-turns the US side made after trade talks. "I run my firm with a plan B and plan C in place, with preparations for the worst-case scenario."

Hong runs Qicaihu Garments & Weaving Co Ltd in Jinjiang, Southeast China's Fujian province. The company's bikinis and beach shorts are supplied to leading retailers including Auchan, Walmart and Target. Now it has a market presence of $100 million across all continents except Antarctica.

His countermeasures include tapping into markets in South America and Africa and adding 30 percent more spending in research and development this year to move up the value chain.

"We expect a 15-percent annual increase in our exports, with Brazil and Chile emerging as strong engines of growth," Hong said. "Argentina will be our next stop."

Su Sunwei, a local commerce official, said Jinjiang saw stable foreign trade growth this year thanks to major enterprises' new markets, technical innovation and stronger bargaining power.

In the January-July period, Fujian's trade with countries along the Belt and Road surged by 12.4 percent year-on-year to 256.8 billion yuan ($36.4 billion), and trade with Latin America and Africa jumped by 17.3 percent and 23.2 percent, respectively.

The figures are part of a broader shift. China's foreign trade with B&R countries grew by 10.2 percent in the first seven months to over 5 trillion yuan, 6 percentage points higher than the country's overall trade growth, data from the General Administration of Customs showed.

"Enterprises cannot decide tariffs of another country, but we can focus on our own businesses," Hong said. "The trade war might prove to be a blessing in disguise in the end as it prods the sector to accelerate transformation and secure new opportunities."

Stronger immune system

The ongoing trade spat has put an end to what Hong calls "the good old days of making big bucks fast," but he believes it is one of the vicissitudes in China's development process and could act as kind of a "vaccine" to boost the economy's quality and immunity.

The world's second largest economy remains the world's top growth engine with an enviable 6.3-percent year-on-year GDP growth in the first half of this year and its stability and resilience has been significantly enhanced.

"External uncertainties continue to grow, but the sound fundamentals of China's stable economic trajectory will remain unchanged in the long term," said Gu Xueming, head of the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce (MOC).

China's economy is characterized by strong resilience, huge potential, and great latitude, and the number of positive factors supporting a steady economy is also increasing, Gu said.

So far, China has successfully handled trade frictions with composure. The latest key indicators tell of an economy on a healthy track. In the January-July period, domestic consumption remained at a high level, and foreign direct investment into the Chinese mainland expanded 7.3 percent year-on-year. China's market opening-up is also undeterred by lingering trade uncertainties and keeps expanding.

While the Chinese economy outmanoeuvres the headwinds, the United States is getting closer to a recession in the real economy and a financial crisis, said Mei Xinyu, a researcher with the MOC. "If the trade war is further escalated, it will make problems in the US economy more conspicuous."

"Be like water"

China's gains and losses in trade frictions should not be judged by its gains and losses of trade with one country, but should be based on China's share of global trade, according to Li Xunlei, a chief economist with Zhongtai Securities.

"As long as China upholds free and fair trade, its position in global trade can be further elevated," Li said in a research note, adding that China can keep improving the free trade environment and advancing opening-up with other countries as a countermeasure.

Zhu Mengnan, a deputy dean of Xiamen University's School of Economics, said the China-US trade war would be a protracted one and China should have a long-term vision and work out different sets of feasible plans.

Commenting on China's position that it has to take necessary countermeasures in response to the US announcement of imposing additional 10 percent tariffs on $300 billion of Chinese imports, Zhu reckoned that China's responses would depend on the actual actions of the US side as well as the progress of trade talks.

"What's important is to stay calm and focus our attention on our own affairs," he said. "China will engage in practical negotiations in good faith. At the same time, it will make full preparations in case the other party breaches the consensus and prolongs the trade war."

Li Peigong, a visiting professor with Shanghai Lixin University of Accounting and Finance, compares China's trade counterstrike to flexible jeet kune do, a hybrid martial arts philosophy founded by kung fu film star Bruce Lee.

China still has numerous undeployed measures in the trade war and shows greater endurance, he said. "Jeet kune do is not fixed or patterned and works on the use of different 'tools' for different situations. A good fighter can move freely without hesitation and 'be like water.'"

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