Data speak: Where does China's economic stability come from?

Data speak: Where does China's economic stability come from?

Original 2022-08-26 13:05 CCTV News

Recently, China's economic indicators have been released in succession from January to July, causing a lot of concern.

As the largest trading partner of more than 120 countries and regions in the world, the next trend of China's economy affects the pulse of the global economy.

In the past decade, the number of routes to 11 international hub ports along the coast of China has increased by 60%. The maritime transport service network connects major ports in more than 100 countries and regions, becoming the country with the highest maritime transport connectivity in the world

How should we understand the challenges China's economy is experiencing and the expectations for future growth in the current century, when the changes in the century and the epidemic situation in the century are intertwined and countries around the world are deeply impacted?

How to find the right coordinate for evaluating China's economy?

Yu Yuan and Tan Tian worked out an account with the authority.

Which epidemic prevention and control mode has the lowest cost?

A research team from the National Bureau of Statistics conducted a model calculation on the relationship between the epidemic prevention and control policies, macroeconomic policies and economic loss rates of countries since the COVID-19. The results show that:

From 2020 to the first half of 2022, the total loss rate of China's economy under strict control was only 2.3%.

However, the economic loss rate under the mode of tight prevention and control (such as Japan and South Korea), passive prevention and control (such as Germany and France) and passive prevention and control (such as the United States and the United Kingdom) reached 3.9%, 5.5% and 5.9% respectively.

At the same time, after excluding the impact of macroeconomic policies, China's economic loss rate has dropped to the lowest level among the major countries mentioned above.

The international media pointed out in an article entitled "China's COVID-19 Infection" Dynamic Zeroing "Policy Contains Lessons for Other Countries" that China's anti epidemic policy of "Dynamic Zeroing" has achieved the goal that every country sought two years ago: low mortality and as little economic chaos as possible.

China's epidemic prevention model has achieved the effect of taking into account both epidemic prevention and production development.

A typical example is that in the first half of this year, while the economic growth expectations of major countries in the world are declining, China's export data has become the highlight of growth.

Why has China become the lifeline of the world?

This is one of the perspectives of the epidemic prevention cost accounting. China insists on adopting "dynamic clearing" to minimize the human, material and economic and social costs, in exchange for the overall stability of the economy and society.

Behind the low loss rate of China's economy is the stability and resilience of China's supply chain and industrial chain under the "dynamic clearing" policy.

Over the past two years, this has been highlighted by repeated and delayed outbreaks.

Recently, Yuyuan Tan Tian talked with Yan Ci, the chief representative of Maersk Group, a global container shipping logistics giant in China.

The year when Maersk invested in the first fully automated warehousing project in China was the year when the epidemic was just beginning.

There are reasons for Maersk's confidence in daring to cast this project against the wind.

At the China International Trade in Services Fair in 2020, Yanci praised the company for maintaining normal operation with the help of the Chinese government and the uninterrupted supply chain.

During the epidemic, China has fully guaranteed the production of enterprises with a stable soft and hard environment. Goods manufactured in China are continuously transported to the world through logistics companies such as Maersk.

According to the statistics of the United Nations Conference on Trade and Development, during the epidemic, China's share of the total value of global commodity exports increased from 13% in 2019 to 15% by the end of 2021.

Among them, China's share in global electronic exports increased from 38% in 2019 to 42% in 2021, and its share in textile exports increased from 32% to 34%.

China's increased export share has become the "lifeline" of the United States, Britain and other countries.

In 2020, when the epidemic just broke out, 83% of the imported masks in the United States were produced in China, two-thirds of the protective clothing came from China, and 90% of the box refrigerators specially used for storing vaccines came from China, showing an explosive growth.

China's epidemic prevention and control has stabilized the industrial chain and supply chain, making it made in China a ballast stone to meet the needs of global epidemic prevention, production and life.

The stability in the face of wind and rain comes from the accumulation of ten years of sharpening a sword. The "Decoding Decade" broadcast by the main station is the best example.

The number of China-Europe trains, which are still running smoothly on the Eurasian continent under the epidemic, has increased explosively in the past decade, reaching nearly 900 times that of the year when they were opened. At present, there are 42 trains on average every day between China and more than 190 European cities

In the complex global epidemic situation, stable policies and environment are more attractive, and sharp international capital flow is very persuasive.

A few days ago, the Ministry of Commerce announced that from January to July this year, the actual amount of foreign capital used nationwide was 798.33 billion yuan, an increase of 17.3% year-on-year based on comparable standards.

Investment is confidence.

Who has greater confidence in China?

We can look at the four source countries of investment in China that the Ministry of Commerce has highlighted:

The United States, which is weak in epidemic prevention and control, increased its investment in China by 36.3%, and the rest of the countries are also allies that the United States is trying to attract.

You know, for a long time in the past, the focus of American diplomacy was to build small courtyards and high walls on the industrial chain with these countries as the axis.

But what is the trend of the times? Multinational enterprises have given their own choices by "voting with their feet".

According to the 2022 White Paper of American Enterprises in China released by the American Chamber of Commerce in China this year, more than two-thirds of member companies continue to list China as the primary market.

Starbucks, a coffee chain based in Seattle, is committed to the goal of opening 6000 stores in China by the end of the year.

Germany, in the first half of this year, set a record high in its investment in China for half a year since 2000. Among the industries in which Germany has increased its investment in China, there is its manufacturing industry, the "pearl in the crown" - the automobile industry.

This year, Volkswagen of Germany, which has been producing and operating in China for nearly 40 years, established its first subsidiary of software company CARIAD in China - which is also the first overseas subsidiary of CARIAD.

Nearly 40 years ago, the entry of Volkswagen laid the seeds of growth for China's automobile industry.

Today, in the view of Volkswagen, the establishment of new factories in China, which ranks first in the world in the scale of the new energy vehicle industry, represents the hope of Volkswagen.

Bringing the "leader" of the country's top industries to China means more valuable confidence in addition to economic considerations.

From a global perspective, the United States, Japan and South Korea, and Germany are the economic leaders of the Americas, Asia-Pacific and Europe, and also the wind vane of their region. Their choices are very convincing.

In fact, the Americans themselves have long forgotten: China is one of the countries with the highest total return rate of foreign direct investment in the United States.

According to the calculation of the United States Economic Analysis Agency, from 2000 to 2020, the average yield of US direct investment in China was 14.7%, far higher than the 9.7% yield of US overseas direct investment.

On the contrary, if American enterprises' investment in China is halved, it will cause very direct harm to the American economy, with a one-time loss of gross domestic product (GDP) of up to $500 billion.

Even during the COVID-19, the overall return rate of foreign investment in China is still rising. In 2021, foreign investors will still be able to obtain a yield of more than 6% when investing in China.

From a longer time perspective, the rate of return on investment in China in 2020 and 2021 remains at a stable level compared with previous years.

Under the epidemic situation, it remains stable, which is very illustrative.

Pan Yuanyuan, an international investment expert of the Chinese Academy of Social Sciences, told Yu Yuan and Tan Tian:

The first characteristic of FDI is its long time cycle; Second, foreign-funded enterprises will also participate in the management, bring their own technology, experience and channels to China, and combine with China's resources for transformation. Therefore, unlike short-term speculative investments in the securities market, direct investment places more emphasis on the fundamentals of the economy, while also being more alert to risks and uncertainties.

In other words, the most important thing for foreign direct investment is the stability of a country's economic expectations.

4 Why is the stability of China's economic expectations?

Recently, the International Monetary Fund has also increased the weight of RMB in special drawing rights (SDRs) from 10.92% in 2016 to 12.28%.

This figure is the confidence of the international community in the stability of China's economy and financial market, as well as the recognition of China's effective epidemic prevention and control.

In 2020, under the epidemic crisis, countries have different economic policies to cope with the impact.

The countries represented by the United States have adopted unlimited quantitative easing policies in order to achieve quick results in the short term.

From the second quarter of 2020 to the first quarter of 2021, the year-on-year growth rate of M2 in the United States remained above 20%, and the average growth rate of M2 after the epidemic was about 10 percentage points faster than that before the epidemic.

Not only that, the United States has also introduced large-scale economic relief laws many times. The fiscal deficit rate in 2021 reached 12.4%, even higher than the historical highest level of 9.8% during the financial crisis in 2009.

"The use of powerful drugs" seems to have quick effects, but has led to adverse consequences.

During the epidemic, the United States not only led the countries involved in the survey with an economic loss rate of 6.5% (excluding the impact of macroeconomic policies). The more direct manifestation is that the inflation level in the United States has reached a 41-year high.

The inflation in the United States not only makes American enterprises and consumers bear the high cost of production and living, but also transfers the crisis to the world.

According to the assessment of the Bank for International Settlements, nearly 60% of developed economies have an annual inflation rate of more than 5%, the highest level since the late 1980s; The inflation rate of more than 50% of developing countries has also exceeded 7%.

The Federal Reserve's rapid interest rate increase in response to inflation has expanded the debt scale of emerging market countries. According to estimates by the International Monetary Fund, there are currently 38 developing countries facing debt risks.

Under the impact of global inflation and the increase of interest rates by the Federal Reserve, Sri Lanka had to declare bankruptcy because of "insolvency", and became the first new market country to default on its sovereign debt in 2022.

Compared with the strong stimulus measures of the United States, during the epidemic, China's macroeconomic policy has always been guided slowly at a steady pace. In the first half of this year, the national consumer price index (CPI) rose 1.7% year on year, far below the level of European and American countries.

For this reason, the dollar index has risen by more than 11% this year, and the depreciation of the euro, sterling and yen against the dollar has ranged from 10% to 17%. Compared with these major global currencies, the performance of the RMB is relatively stable - about 5.8% depreciation against the US dollar.

As Lu Jinyong, director of the Foreign Direct Investment Research Center of the University of International Business and Economics, said, China still gives people a kind of expectation and hope - an expectation of growth, an expectation of profit and a hope of getting better and better, even when the global economy and market are not very prosperous.

Among the articles of international media commenting on China's economy, one of them is titled "China's economy has hidden power".

What is the hidden power of China's economy?

It is to coordinate development and security, and to deal with the outstanding problems of economic development with a systematic concept.

The wind is fast and the waves are high, but it is tough as a rock. It is stable and has its own sky.