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China should pay attention to US pessimism of its economy

Editor: Tong Xinxin 丨CCTV.com

02-03-2016 09:50 BJT

By Yu Xiang, Harvard University Visiting Scholar, Director of division of American economic studies, Associate research fellow, Institute of American Studies, China Institutes of Contemporary International Relations (CICIR)

The United States is broadcasting extensive news coverage on China’s  economic slowdown. Those negative reports give Americans and others reading the news the perception that China faces more serious difficulties. 

Billionaire investor George Soros told Bloomberg TV on Jan.21 that he sees a hard landing for China's economy, which could deepen people’s concerns.

It’s lucky that China has not been targeted for much discussion on the US presidential campaign trail already. 

The negative news reports on China are likely to attract more public attention, since presidential candidates can’t avoid the topic of China, even if they don’t want to debate on it.

The negative feelings on China’s economy could influence investors’ investing plans and that may draw out some political issues. The American Chamber’s survey on Jan. 20, 2016 shows that foreign firms are less confident in China’s economy. 

More overseas businesses are cutting back investments with some planning to move production out of the country. 

Nearly one third of Chamber member companies plan no investment expansion in China, one third intend to expand their investment by less than 10%, which are at lower rates than previous years.

“The coming collapse of China” argument has come out again with a new version. They don’t declare that China as a country will collapse, but say China’s still powerful but less potent. 

They claim that genuine benefits from the domestic stimulus programs are fading fast. China will face challenges to its political legitimacy, and will be hammered by the slowdown of its economic development. The new argument is appalling. 

Beijing should pay much attention to pessimistic expectations of its economy, and improve skills to communicate about the markets in a more technical manner. 

Showing its open and scientific attitude, Beijing should not avoid using the word, “slowing.” Accordingly, China let others know its economy slowing down is not a personal event.  It’s a balance, known as a “collective slowing down” of newly emerging-market countries.

China should show its tool kit for stimulating the economy, explaining policy options and how the so-called over-indebtedness is not the biggest risk, since the scale of China’s state owned economy and assets is very large, which could cover losses. 

On specific speculations and vicious shorting operations, China should launch judicial investigations immediately by drawing on American experiences. The process should be fair and transparent.  Beijing should not give up its determination to stick to proposed economic reforms.  

That’s beneficial for China’s long term development. China could not return to an investment-led economy when facing difficulties. No country’s long-term development in history has relied so heavily on investment.

 

( The opinions expressed here do not necessarily reflect the opinions of Panview or CCTV.com. )

 

 

Panview offers a new window of understanding the world as well as China through the views, opinions, and analysis of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

Panview offers an alternative angle on China and the rest of the world through the analyses and opinions of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.


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