The Trump administration kicked off a trade war by imposing additional 25 percent tariffs on $34 billion worth of Chinese products on July 6, forcing China to take retaliatory measures.
Chinese Premier Li Keqiang said on July 7 that there won’t be winners in a trade war, which will not only harm enterprises and consumers from both sides but also impede the world’s economic recovery.
Globalization is the major trend. China is fighting protectionism and safeguarding the common interests of people by upholding multilateralism. More than 40 economies, including the EU, Canada, Russia and Japan, have now taken strong retaliatory measures against the US moves to raise tariffs. The BRICS Trade Ministers’ meetings also showed support for the multilateral trading system.
China is determined to maintain its influence, circumvent disruptions, and achieve long-term development goals. China’s economic growth has given confidence to the country to continue development and opening-up during this trade war.
China’s confidence stems from it being the largest consumer market, providing the country with unparalleled potential. Consumption is the foremost driving force of China’s economic growth. As the world’s second largest economy, the Chinese market is vast with the middle class as its backbone. It is growing stronger as the economy grows. Last year, the contribution of consumption to economic growth was 58.8 percent, and in the first quarter of 2018, it reached 77.8 percent.
The largest manufacturing sector is also based in China, and it is the only country with all industrial categories in the UN’s industry classification. The potential of domestic demand and a complete value chain are important sources for China’s competitiveness. Thus, the country’s economy is resilient to external shocks with ample room to move forward.
In the last five years, China’s economy has contributed more than 30 percent to world economic growth. In 2017, China’s economic aggregation was more than 80 trillion yuan ($12 trillion). The trade war will be a fight between two international giants and with the international community’s support China has a good chance of coming out on top.
Quality growth has also given China more confidence. Supply-side structural reform has transformed the country’s growth from export-oriented to consumption-led. At the same time, China’s international trade with emerging markets has given it more strength to deal with the adverse effects that a trade war may bring to economic development.
There is considerable flexibility in China’s commodity market and employment market, and the international trading departments’ flexibility is outstanding. The majority of China's trade surplus is achieved by private enterprises and joint ventures, which are most dynamic and resilient. In the first quarter, the import and export by private enterprises in China was 2.59 trillion yuan, up 14.5percent, accounting for 38.3 percent of the country’s total import and export value, an increase of 1.7 percentage points over the same period last year, according to data released by the General Administration of Customs.
What does not kill you makes you stronger and China has the confidence to thrive through the trade war.