The Hundred Year Change And The Century Epidemic Are Intertwined. Where Does China'S Economic Stability Come From

Recently, China's economic indicators from January to July have been released, which has aroused a lot of attention.

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 China's coast has increased by 60%. The maritime transport service network has connected major ports in more than 100 countries and regions, becoming the country with the highest maritime transport connectivity in the world

At present, under the general environment of century long changes and century wide epidemics intertwined, and countries around the world were deeply impacted, how should we understand the challenges that China's economy is currently experiencing and the expectations of future growth?

How to find the coordinates to evaluate China's economy?

Tan Zhu and the authorities worked out an account.

　　01、 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 outbreak of 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 is only 2.3%.

The economic loss rate under the 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) modes 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 among the major countries mentioned above has dropped to the lowest level.

The international media pointed out in an article entitled "China's policy of" dynamic zeroing "of COVID-19 infection 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 giving consideration to both epidemic prevention and production development.

A typical example is that in the first half of this year, China's export data has become a bright spot of growth in the face of declining economic growth expectations of major countries around the world.

　　02

Why has China become the global lifeline?

This is one of the perspectives from which epidemic prevention costs are accounted for. China insists on "dynamic zeroing", which reduces human, material and economic and social costs as much as possible, resulting in overall economic and social stability.

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 reset" policy.

In the past two years, this point has been highlighted by the delayed and repeated epidemic.

Recently, Tan Zhu chatted with Yan, the Chinese chief representative of Maersk Group, a global container shipping logistics giant.

The year when Maersk invested in the first fully automated storage project in China was 2020, when the epidemic just started.

Maersk has reason to be confident in daring to invest in this project against the wind.

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

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

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

Among them, China's share in global electronics 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" for the United States, Britain and other countries to maintain operation.

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

China's epidemic prevention and control has stabilized the industrial chain and supply chain, making "Made in China" a ballast 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 "Ten Years of Decoding" broadcast by the main station is the best example.

Under the epidemic situation, the number of China Europe trains still running smoothly in the Eurasian continent has exploded in this decade, reaching nearly 900 times that of the year when they were opened. Now, on average, 42 trains travel between China and more than 190 European cities every day

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

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

Investment is confidence.

　　03、 Who has greater confidence in China?

We can see the four source countries of investment in China highlighted by the Ministry of Commerce:

The United States, which failed to prevent and control the epidemic, increased its investment in China by 36.3%. 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, one of the focuses 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 general trend? Multinational enterprises have given their own choices by "voting with their feet".

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

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

In the first half of this year, Germany's investment in China hit a record high in the history of half a year since 2000. Among the industries that Germany has increased its investment in China, there is the "pearl in the crown" of its manufacturing industry - the automobile industry.

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

Nearly 40 years ago, the arrival of Volkswagen once planted the seeds of growth for China's automobile industry.

Today, in the opinion of Volkswagen, the establishment of a new factory in China, the largest new energy vehicle industry in the world, represents Volkswagen's hope.

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

From the global perspective, the United States, Japan, South Korea, and Germany are the economic leaders in the Americas, Asia Pacific, and Europe, and also the weather vanes in their regions. Their choices are very convincing.

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

According to the estimates of the US Economic Analysis Agency, the average rate of return on US direct investment in China from 2000 to 2020 was 14.7%, much higher than the 9.7% rate of return on US overseas direct investment.

On the contrary, if US enterprises' investment in China is reduced by half, it will cause very direct damage to the US economy, and the one-time loss of gross domestic product (GDP) will be as high as 500 billion US dollars.

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

From a longer time perspective, the return on investment in China in 2020 and 2021 remains at a stable level than before.

Maintaining stability under the epidemic situation is a good illustration of the problem.

Pan Yuanyuan, an international investment expert from the Chinese Academy of Social Sciences, told Tan Zhu:

The first characteristic of FDI is its long time cycle; Second, foreign-funded enterprises will also participate in management, bring their own technology, experience and channels to China, and combine them with China's resources for transformation. Therefore, unlike short-term speculative investment in the securities market, direct investment pays more attention to economic fundamentals, and is 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.

　　04、 Where does the stability of China's economic expectations come from?

Recently, the International Monetary Fund also increased the weight of RMB in Special Drawing Rights (SDRs) from 10.92% in 2016 to 12.28%.

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

In 2020, under the epidemic crisis, countries have different economic policies to deal 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.

In addition, the United States has also introduced large-scale economic rescue laws for many times. The fiscal deficit rate in 2021 reached 12.4%, even higher than the historical peak of 9.8% during the financial crisis in 2009.

"Taking strong medicine" seems to take effect quickly, but it has led to bad consequences.

During the epidemic, the United States not only ranked among the countries involved in the survey with an economic loss rate of 6.5% (excluding the impact of macroeconomic policies). More directly, the inflation level in the United States hit a new 41 year high.

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

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

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

Under the impact of global inflation and the Federal Reserve's interest rate hike, Sri Lanka had to declare national bankruptcy due to "insolvency", becoming the first new market country to default on sovereign debt in 2022.

Compared with the strong stimulus measures of the United States, during the epidemic, China's macroeconomic policies have 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.

Because of this, the dollar index has risen by more than 11% since this year, and the depreciation of the euro, pound and yen against the dollar is between 10% and 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, in the current global economic and market downturn, China still gives people an expectation and hope - an expectation of growth, profit and better hope.

One of the articles in the international media commenting on China's economy was titled "China's economy has hidden power".

What is the hidden power of China's economy?

It is to coordinate development and security, and it is to use the system concept to deal with prominent problems of economic development.

The wind is swift and the waves are high, but they are as tough as a rock, steady and steady, and have their own sky.

(Source: CCTV)