China’s economy set to get a major boost from 20th Party Congress

As the world economy is mired in a confluence of crises from energy shortages to sky-high inflation to recessionary pressure in major economies, global attention is focused on the Chinese economy, the main driving force of global growth, ahead of the upcoming 20th National Congress of the Communist Party of China (CPC) scheduled for mid-October, which is envisaged to illuminate the road ahead for the world's second-largest economy in the coming years and even decades.

The Chinese economy currently faces multiple downward pressure, including COVID-19 outbreaks and weakening external demand, as evidenced by a significant slowdown in exports in August, which sparked another round of smearing against China's development prospect from foreign doomsayers. However, China's economic fundamentals remain solid, in stark contrast to dire situations in other major economies, and there are sufficient bright spots and policy measures that will ensure stable growth for such a crucial year, economists said.

In the longer term, China will continue to be a main growth driver for the global economy, as the 20th CPC National Congress will inject confidence and lead the nation in embarking on the pursuit of the second centennial goal to build China into a modern socialist power, with all of its institutional advantages that ensured success over the past several decades, economists stressed.

Aerial photo taken on July 29, 2022 shows container ships at the Qianwan Container Terminal in Qingdao Port, east China's Shandong Province. Photo:Xinhua

Resilience amid pressure

While many foreign media outlets were glad to jump to conclusions in the wake of China's August trade number announcement, they seemed to have deliberately turned a blind eye to underlying muscles of the trade figures.

The moderation in trade growth could be attributed to reduced orders in line with a broad decline in external economies, Huo Jianguo, vice president of the China Institute for World Trade Organization Studies, told the Global Times on Thursday.

A competitive devaluation in Japan, South Korea, among other countries amid a strong US dollar also put downward pressure on China's exports, Huo said.

The Chinese yuan has weakened more than 9 percent versus the US dollar so far this year, but it remains much stronger than the Japanese yen and the South Korean won, he continued, adding that sporadic domestic Omicron outbreaks had a certain impact on exports-facilitated logistics capacities.

The country's exports in dollar terms grew by 7.1 percent in August from the year before, while its exports edged up 0.3 percent in August year-on-year, customs data showed on Wednesday. This compares with an 18.0 percent gain in export growth and a 2.3 percent rise in imports in July.

By no means should a loss of faith in the country's export prowess be justified, Huo opined, citing trade readings that point to the sustained competitive edges of notably private firms, the mainstay of China's export juggernaut.

China's dollar-denominated mobile phone exports were up 3.9 percent in the first eight months, quickening from a 2.1 percent increase over the first seven months, per customs statistics.

The rebound bucked an overall slowdown in the country's exports of mechanical and electrical products from July to August, which made up over half of total exports.

More noticeably, the country's brisk exports of new-energy products set it apart from other major economies being crippled by a bruising energy crisis in the wake of the Ukraine tensions.

In a fresh sign, Tesla's Gigafactory Shanghai delivered 399,939 vehicles in the first eight months, only some 80,000 vehicles short of its full-year delivery for 2021, the US electric carmaker said in a statement sent to the Global Times on Thursday.

In the first half, China's exports of new-energy vehicles soared 1.3 times to 202,000 units, accounting for 16.6 percent of total vehicle exports, according to figures from the China Association of Automobile Manufacturers.

As the Russia-Ukraine conflict intensifies the European energy crisis, Germany has plans for a 25-plus percent cut in natural gas consumption, especially in energy-intensive industries. This suggests Europe's chemical production might be partially paralyzed, thereby eroding the continent's exports of mechanical manufacturing, chemical production, transport equipment, among other sectors, according to Chang Ran, a senior research fellow at the Zhixin Investment Research Institute.

Factoring in China's technological and manufacturing strengths across new-energy industrial chains and the EU's push for its pro-new energy policy framework known as REPowerEU that intends to make EU's energy supply more secure, energy product exports will likely be a bright spot of the export landscape, Chang said in a research report sent to the Global Times.

The structural strength of the trade pillar that mirrors the economy's rebalancing at large de facto put the economy in an advantageous position amidst mounting anxieties over global growth, experts emphasized, expecting the economy to keep the power on in the coming months.

With the export juggernaut still in work mode, albeit possible at a slower pace against overall global gloominess, and still robust commitments to infrastructure projects, the Chinese economy in its entirety is anticipated to fare better than other major economies, even though a full-fledged rebound in the country's consumer market will still take time, Huo believed.

 

Workers transport materials at an assembly workshop of CRRC Zhuzhou Locomotive Co., Ltd. in Zhuzhou, central China's Hunan Province, July 5, 2022. Photo:Xinhua

Source of optimism

In a fresh attempt to revitalize the economy, a State Council executive meeting presided over by Premier Li Keqiang on Wednesday pledged to finish the issuance of 500 billion yuan ($71.92 billion) of special bonds from local governments' previously unused quotas since 2019 by the end of October, the state broadcaster reported on Thursday.

The bond issuance would prioritize the funding of projects being built, according to the report. The Wednesday meeting also urged the stepped-up policy support for employment and entrepreneurship so as to nurture a new growth momentum.

The fresh meeting read-out, in addition to Monday's announcement of an additional 300 billion yuan in funds through an infrastructure-targeted policy bank financing arrangement, is considered to reassure the markets of the Chinese economy's capability of sailing through transient challenges.

"We are expecting that the measures taken by China and the Chinese authorities will lead to a revival of growth," Xinhua said in an article earlier this year, citing World Economic Forum (WEF) President Borge Brende.

Voicing his optimism about China's medium- and long-term economic development, Brende said that "China's role in securing global growth has been incredible ... What happens in China economically has a huge impact on the rest of the world, and that will continue because it is the second largest economy."

A bright future

As all eyes fixate on the upcoming 20th CPC National Congress to be held in mid-October, a monumental gathering that will spearhead the economic and societal trends, the economy is set to get a big boost, thereby anchoring the global economy toward more secured growth, Cao Heping, an economist at Peking University, told the Global Times on Thursday.

The country had realized the first centennial goal - building a moderately prosperous society in all respects, the Chinese leadership announced on the 100th anniversary of the CPC's founding on July 1, 2021.

The forthcoming congress must be a significant event to cement belief on the country's unswerving call for higher-level opening-up and its continued reform efforts in the sphere of business climate, fair competition, among others, Huo stressed, expecting even bolder moves in flexing the country's institutional strengths to paint China as an indefatigable global growth driver.

Betting on the momentous congress to be a cohesive, enlightening and triumphant gathering, Cao was confident about the tone-setting meeting to instill confidence into the global business community, which hinges growth on a more open and stronger Chinese economy that will continue blazing the trail of globalization regardless of varied uncertainties.