People wonder how much influence China-US trade disputes will have on China’s economy and whether China’s economy can withstand the test. 

File photo: VCG

In response to these concerns, enterprises, experts and some Chinese residents showed their confidence inon the stability of the economic development and had bright prospects for the country.

China has managed to stabilize foreign trade. In the first five months, the total value of China's foreign trade in goods increased by 4.1 percent year-on-year.

Such an achievement is attributed to the fact that the country has solidly advanced the efforts to improve efficiency and reduce fees for ports, deepened reforms of added-value tax to further reduce the tax burden on various industries, exempted import tariffs for certain goods to boost consumption and provided financial services to foreign tradinge companies.

China sees rising momentum for investment. Guided by the policy toof stabilizing e investment, China's investment and market environment continued to improve. In the first five months of this year, China’s fixed-asset investment increased by 5.6 percent year-on-year.

China remains an attractive destination for foreign investment despite the China-US economic and trade frictions.

US automaker Tesla has ramped up investment in China by build-ing a factory in Shanghai and German automaker BMW has also increased investment in China. BesidesIn addition, China embraced theits first foreign-controlled securities company.

China sees stronger consumption momentum. The country has rolled out measures to lift consumers’ purchasing power and promote consumption upgrading. As a result, the Chinese consumers have become more willing to buy more.

In the first five months of this year, the total retail sales of consumer goods in China increased by 8.1 percent year-on-year, of which online retail sales increased by 17.8 percent.

In the first quarter of this year, China's economy grew by 6.4 percent year-on-year, flat compared with the fourth quarter last year. China's economic operations have s remained within a reasonable range, achieving progress while ensuring stability, said Ning Jizhe, deputy director of the National Development and Reform Commission.

The dynamic economic adjustment will mitigate the impact of trade frictions.

From a macro perspective, the impacts of trade frictions on China’s economy are controllable and a series of targeted measures will hedge against negative impacts.

Since the trade frictions started, many experts from various research institutions have estimated the negative impact of trade frictions on China's economic growth by simulating actual economic operations.

Gao Lingyun, a researcher from the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, estimated that if the 25 percent tariffs are imposed on an additional $300 billion worth of Chinese imports, that will cause China's GDP growth rate to fall by 0.52 percentage points.

However, it should be noted that the economy has the ability to adjust its own development, including both thethrough market means and through the macro-control of the government.

In China, the government is capable of controlling the economic development with adequate regulatory policies and approaches. Therefore, in the long run, the dynamic economic adjustment will weaken the impact of trade frictions.

For example, the individual income tax reform that began on October 1 last year has eased the burden on low- and middle-income groups and stimulated the household consumption.

A recent report released by the China Center for Economic Research shows that this reform can eventually expand the consumption by 717.6 billion yuan (roughly $104 billion), which can boost China's economic growth by 0.87 percentage points based on the GDP in 2017. Apparently, the tax reform alone can offset to a considerable extent the decline in GDP growth estimated by the experts on the basis of the economic and trade frictions.

While the individual income tax reform helped cut taxes by several hundred billion yuan, the deepening reform in value-added tax that started on April 1st will cut taxes by more than 1 trillion yuan, which will play a more significant role in stabilizing economic growth.

Besides, China’s fiscal deficit rate is 2.8 percent, lower than the international 3 percent deficit warning line. The required deposit reserve ratio is at a relatively high level. Proactive fiscal policy and prudent monetary policy make the economy more flexible in the face of the external risks and uncertainties.

From a micro perspective, trade friction is impacting the lives of the people and the production of enterprises, but not in a severe manner.

China’s commodity prices haves maintainedremained stable in general since this year. In the first five months, the consumer price index went up by 2.2 percent from a year ago.

“Compared with the maximum pressure exerted by the US which ignored its own losses, we made thoughtful arrangements inwith the products subjected to tariffs. We adopted four levels of tariffs on the $60 million worth of US imports, from 5 and 10 percent to 20 and 25 percent. And we adopted low tariff rates on those products that are difficult to be substituted in order to reduce negative impacts on the domestic market,” said Liang Ming, director of the Institute of International Trade at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.

Meanwhile, China also expanded imports from other countries to lower the impacts of countermeasures on its residents. For instance, according to official statistics, China’s imports from the US dropped by 70.6 percent compared with that a year ago in the first four months of this year, while its imports from Brazil and Argentina surged by 46.8 percent and 23 fold, respectively.

For some enterprises, trade friction might cause difficulties for production, but such impacts are temporary. During the interviews, many companies said that there’s no difficulty that cannot be overcome as long as they make themselves stronger and keep upgrading.

From another perspective, if the trade friction is forcing development of Chinese enterprises, it might become a critical opportunity for Chinese economic transformation.

“The pressure of trade friction is forcing us to accelerate the innovation in core partsareas,” said Tao Yueyu, chairman of Companion, a Shanghai-based producer of fine ceramics.  

The company has just developed technologies to create advanced anti-corrosion ceramics that are able to resist high temperatures. According to Tao, they used to rely on imports to survive, but are now supplying other domestic enterprises.

As the world’s largest developing country, there are still some development gaps among regions and between rural and urban areas. However, such development gaps represent potential for growth and also space for progress.

“Major countries enjoy a good balance of internal economic structure. Such countries can shift their focus into the central and western regions once the east is affected. Meanwhile, even though one industry is impacted, but hundreds of other industries remain developing with increasingly sound momentum,” said Wang Changlin, Vice President of China’s Academy of Macroeconomic Research (AMR). 

Effective regulation contributes greatly to the resilience of the Chinese economy. “The Chinese government has sufficient policy tools to ensure stable economic performance,” noted Liang Guoyong, a senior economic affairs officer with the United Nations Conference on Trade and Development.

At the beginning of this June, forecasts from the World Bank and the International Monetary Fund both suggested that the Chinese economy is likely to see a growth of more than 6 percent this year, despite the increasing uncertainties on economic growth caused by economic and trade frictions.