Journal warns trade war will affect financial stability

Source:Reuters-Global Times Published: 2018/9/2 17:18:41

But commentary says China’s economy can now withstand external shocks

A Chinese Communist Party journal said on Saturday that the country may experience near-term pain from trade frictions with the US, including a negative impact on financial stability, but China's stable growth trend would not change.

A commentary in Qiushi Journal, which is affiliated to the CPC  Central Committee, warned that trade and economic frictions between China and the US could undermine "China's economic growth, financial stability, trade and investment, employment and people's livelihoods," particularly in industries exposed to tariff action by the US.

"But at the same time, we must see that the fundamentals of China's economic development have not changed. In particular, China's economic structure has been significantly improved in recent years, which has effectively improved its ability to withstand external shocks."

The US had "provoked" these frictions, but China would accelerate research and development on core technologies, optimize its industrial structure, promote market diversification and strengthen support provided by domestic demand to "turn bad into good," the commentary said.

It said that China's macroeconomic management had "sufficient policy space" to counter negative impacts, with fiscal policies potentially playing a "greater role in expanding domestic demand and restructuring."

"Unblocking the transmission mechanism of monetary policy and guiding funds to invest in the real economy, particularly small and micro-enterprises, can alleviate the problem of difficult or expensive financing and strengthen the ability of the financial industry and the real economy to withstand risks," it said.

"A just cause finds much support, an unjust one finds little," the commentary said, quoting Chinese philosopher Mencius. "Over time, China-US economic and trade frictions will surely continue to develop in a direction favorable to China."

In a separate Qiushi commentary, Chinese Commerce Minister Zhong Shan called for "proactively expanding imports to promote balanced trade."

China must "strengthen the protection of intellectual property rights, protect the legitimate rights and interests of foreign investors, and create a good business environment for investing in China," Zhong wrote.

China will "greatly relax market access" and "steadily expand the opening of the financial industry, continue to promote the opening of the service industry and deepen the opening-up of the agricultural, mining and manufacturing sectors," he said.

An official said in May that China's opening of its financial sector to foreign banks and financial institutions would be based on the principal of reciprocity.

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