Photo: Chen Xia/Global Times

Photo: Chen Xia/Global Times

While a growing number of Americans say the US economy is headed in the wrong direction, due to rising inflation and a slowdown in American consumer spending, China’s economy is firing on all cylinders now to support a contraction or contraction in April. The figures for May, when the coronavirus lockdown in Shanghai and parts of Beijing, Shenzhen and other major cities led to a sharp decline in the economy.

June and the first half of this month have shown that the second largest economy in the world is rising rapidly. In June, China’s export machinery showed its full strength again, as exports grew by 17.9 percent, hitting $331 billion, the fastest growth in the first six months as the COVID-19 restrictions eased. The purchasing power of Chinese consumers has also increased since June, which is boosting the economy. The economy will improve in the second half of 2022.

To achieve annual GDP growth of 5 percent beyond 2021, the Chinese government has implemented a fiscal and monetary stimulus program, including tax exemptions and rebates, increased bond sales by local governments and reduced borrowing costs. (LPR). Also, the government took steps to liberalize the economy through a number of restrictive measures, making the country’s financial markets open to foreign investors.

China’s GDP grew 2.5 percent in the first half of 2022, the country’s statistics office said on Friday. It will not be easy to achieve the growth of 5.5 percent, established at the National People’s Congress (NPC) in March, when the world is facing many uncertainties, from the global spread of different types of coronavirus, inflation and deflation. The economic slowdown in the US and almost all other major economies, as well as political tensions and major disruptions in oil, grain, fertilizer and semiconductors around the world.

However, China has been given a rare opportunity to benefit from low prices, due to the country’s abundance of agricultural products, vegetables, fruits, eggs and pork. The influx of cheap labor has helped power the country’s large manufacturing industry, keeping the cost of many of its products low.

In addition, China has enjoyed a huge foreign trade surplus – $97.94 billion in June alone – which has significantly weakened the yuan’s exchange rate with other major world currencies and helped keep inflation at bay. In sharp contrast, the euro, the British pound, the Japanese yen and the Indian rupee all fell against the US dollar, as the US Federal Reserve began tightening monetary policy by raising interest rates to 8.6 percent in May and 9.1 percent. inflation in June.

In the second half of 2022, China can continue to maintain its open currency to provide sufficient funds to support domestic investment and economic growth. During the global financial crisis, the country has, time and again, invested heavily in infrastructure improvements and industrialization to help weather economic downturns, and surprisingly, the country has always come out in a better way. and increased industrial and technological competition between countries.

For example, because of Beijing’s efforts to support green technology, the country has invested heavily in electric power plants, solar panels, wind turbines, nuclear reactors and electric buses and cars. Now, China’s production in these areas is leading the world. In June, China exported 248,000 vehicles, up 30.5 percent from a year ago, of which electric vehicles accounted for nearly one-fifth, making the country the world’s richest and largest exporter of new vehicles.

Thanks to strong bank loan repayments and fresh government bond sales, China’s debt rose more than expected in June to a record high. Total assets, mostly loans, rose 5.2 trillion yuan ($777 billion) in June, the People’s Bank of China, the central bank, said last week. It was the highest for any June in the corresponding period of 2017 and reached a total of 4.2 trillion yuan. Naturally, the end of the lockdown in Shanghai and other Chinese cities has contributed to the rise in borrowing.

Instead, some economies around the world are being forced to raise interest rates by 50 to 75 basis points each to curb inflation. Higher mortgage rates will reduce consumer and corporate credit and slow economic growth. The economies of the US, Europe and Japan are expected to slow or decline from the end of this year and into 2023.

In the face of the “three economic challenges” including uncertain demand, economic shocks and weak prospects, China’s “Internal and External Circulation” strategy will emerge. Increased investment and exports will also ensure the strength of China’s economy. With the help of the RCEP free trade agreement and the famous Belt and Road Initiative, China and its close friends in ASEAN can see GDP growth of more than 4 percent this year, giving the country hope in a time of economic crisis and political turmoil.

The author is an editor with Global Times.

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