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China's Q1 GDP to remain positive despite grim forecasts

Better-than-expected data and emerging positive trends for China's foreign trade in the first quarter indicate that, despite the double strike of a deadly pandemic and a pointless trade war, China's economic growth for the quarter is expected to reach 4 percent to 5 percent, even as gloomy global forecasts of negative growth loom.

 

China's foreign trade dipped 6.4 percent year-on-year to 6.57 trillion yuan ($933 billion) in the first quarter, official data showed on Tuesday. The mild decline shows that although COVID-19 has been extremely troubling for many sectors, the overall impact is still within a predictable and affordable range.

 

In March, China's total trade was down a mere 0.8 percent compared to a 9.6 percent fall in the first two months. The startling recovery clearly demonstrates the country has successfully negotiated the balance between production resumption and virus control, and has made progress in both. Orderly production resumption has provided essential support in stabilizing foreign trade, thereby reducing economic losses and allowing the country to strive for the best possible economic performance through the year.

 

China may not offer specific numbers or ranges for the closely watched whole year GDP growth target in its Government Work Report expected to be released during the two sessions which will likely be held in June, but will keep the economy growing within a reasonable range.

 

At present, the major uncertainty in China's economy comes from abroad. With the pandemic raging in many countries and regions, Chinese companies are facing risks of a sharp fall in overseas export orders. Coupled with an economic activity halt due to virus control measures in those countries, disruptions in global industrial and supply chains may deal a more severe blow to China's manufacturing sector.

 

However, China's trade data for the first quarter showed many positive trends that may help Chinese companies endure their hardships. For instance, ASEAN, which is regarded as the world's fastest growing economy, surpassed the EU to become China's largest trading partner in the first quarter. The shift shows that Chinese companies can still seek to offset virus impacts by adjusting their target markets and finding alternative suppliers.

 

In addition, major stability factors that can enable China to anchor the stability of the world economy amid the virus crisis have become apparent.

 

First, China's agriculture sector, the foundation of its economic stability, remains stable in both domestic production and imports.

 

Second, the country's energy supply and demand remain stable. Although international oil prices picked up after the OPEC+ deal, they are still expected to remain in a favorable range for China.

 

Third, the domestic market supply is stable. Although the core components or modules of some mid-to-high-end industries need to rely on imports, China has the most complete manufacturing industry system in the world, and some industries have the added advantages of entire industrial chains.

 

These factors all point to the expectation that China's economic growth in the first half of the year will stay above 4 percent, and it is expected that China's economic contribution to global economic growth for the whole year may exceed 40 percent.

 

The global economy has been warned it is set to suffer its worst year since the Great Depression of the 1930s, and major developed countries have run out of room for bailouts and monetary and fiscal stimulus. The only way to prevent the global economy from falling into another depression is to strengthen international cooperation.

 

China's trade data shows it is purchasing US products according to the phase one trade deal, but the US' pointless trade war and beggar-thy-neighbor approach to trade amid the pandemic have sabotaged international cooperation, which will hold back the global fight against the invisible enemy and halt global economic recovery.

 

The US should draw a lesson from its slow response to the pandemic, cease its trade wars and protectionism as soon as possible, and actively engage in international cooperation to jointly overcome the severe challenge facing the world, rather than become the culprit that will push the global economy into chaos.


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