Dealing with China’s downward pressure

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Workers leave a construction site at the end of their shift in Beijing, China December 6, 2016. REUTERS/Thomas Peter

Data released by China’s National Bureau of Statistics (NBS) on Friday showed that the country’s economy grew 6.5 percent year-on-year in the third quarter. It expanded 6.8 percent and 6.7 percent in the first and second quarter respectively, showing a trend of gradual decline.

The ongoing China-US trade war is the biggest variable that has resulted in the increase of the downward pressure facing the Chinese economy. The pressure has yet to be fully released. Therefore now is the time when the trade war has the biggest impact on market confidence.

At the time when the trade war quickly kicks into high gear and the country has already been facing some difficulties in economic transformation, the latest data and trend in the economy are not beyond expectation. It is clear that the economic situation is not ideal but China’s overall performance has shown resilience and stability given the unprecedented poor external environment. China is neither a miracle in bucking the negative trend nor a wobbling tower, prone to collapse. China’s strength and limitation are crystal clear to most of observers.

It is normal that the market shows a lack of confidence in the short term. It would be surprising if all indicators are bullish and confidence is bursting as it did when the economy developed rapidly in its heydays. We should all accept the current condition where market confidence remains weak and view it calmly.

Against the background of short-term volatility in economic development, the confidence of Chinese society in the country’s long-term prospects is even more valuable. It should be noted that the conditions supporting the country’s long-term prospects and confidence are abundant and remain unaffected by short-term fluctuations. China’s economy will maintain higher growth than that of developed countries and most other countries in the world for quite a long time and problems will be resolved over time. Most Chinese people have such faith and expectations.

As long as we have firm faith in China’s long-term prospects and the country is committed to solving problems, the economy will perform well and remain stable, which will, in turn, support the market confidence in short term.

China has a huge economic volume and its capacity to resolve difficulty and breed a new driving force will be tremendous. Such resilience and tenacity is the key attribute of Chinese society. Under current conditions, we should reinforce such attributes, which will directly enhance the country’s capability to conquer hardships and boost confidence in society.

To this end, more efforts are needed in the following aspects.

First, we need to comprehensively boost economic activity. In addition to speeding up economic reform, efforts are needed to improve social governance so that local governments can proactively respond to reform measures in a relaxed atmosphere. A key reason some well-designed measures were not fully carried out is that they didn’t get adequate social support and follow-up. Besides, we need to gradually fix the basic laws, regulations and policies on personal assets and other individual rights to enhance the certainty and predictability of social development.

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