The Western business press seems chronically dissatisfied with the Chinese mainland’s economic policies. Recently, there has been lamentation over the lack of measures targeting consumption, even as Beijing unveiled a $1.4 trillion plan to restructure local government debt. Western observers were also disappointed when the People’s Bank of China acted to support the property and stock markets without significantly stimulating consumption.
This persistent disappointment is likely to continue. It stems not from actions or inactions by Chinese authorities but from fundamental misunderstandings in the West about what truly drives China’s growth and how its authorities manage it.
These misunderstandings were particularly evident in Western reactions to the third plenary session of the 20th Central Committee of the Communist Party of China (CPC) in July. Traditionally, such plenums have marked significant turning points in China’s growth trajectory.
The resolution adopted at the plenary session announced ambitious goals: pursuing revolutionary breakthroughs in technology, innovatively allocating production factors, in-depth industrial transformation and upgrading, and optimizing the combination of laborers, means of labor, and subjects of labor. This is expected to give rise to new industries, new business models, and new growth drivers, promoting the development of productive forces characterized by high technology, high performance, and high quality.
However, the Western press seemed deaf to these impressive ambitions, reverting instead to focusing on Chinese consumption. For instance, a prominent financial newspaper criticized the communiqué for failing to shift China’s growth model away from investment and exports towards household consumption, suggesting this would reduce China’s trade surpluses and invigorate global demand.
In essence, the West appears to want China to solve its own issues of lack of competitiveness and trade deficits by consuming more of its own goods and buying more Western goods. Yet, the West is free to protect its markets if it wishes; after all, it has already undermined the World Trade Organization’s effectiveness. The real problem is that it dares not do this, being addicted to China’s low-cost and high-quality imports. Nor can the West easily improve its competitiveness, as evidenced by the underwhelming outcomes of various industrial policy initiatives.
Understandably, expanding consumption at the expense of investment is unrealistic for China. Exports are another matter. In the face of rising protectionism and anti-globalization, China announced its dual circulation development pattern in 2020, rebalancing exports against domestic consumption and investment.
In this context, China’s exports are still rising. Its trade surplus in 2024 is reaching near-record levels and, if exports continue at the same pace in the closing months of the year, is set to reach almost $1 trillion, according to Bloomberg.
Reference(s):
cgtn.com
