Beijing needs bolder steps to bolster economic growth amid China-US trade truce

By Xiao Xin Source:Global Times Published: 2018/12/3 21:53:39

A China-US tariff truce achieved over the weekend on the sidelines of the G20 summit in Argentina might be beneficial to China's economic restructuring, but the trade dispute won't be a disruptive force affecting the inner dynamics of the Chinese economy.

With the nation expected to face crucial economic challenges in the next year, dormant forces must be awakened to rev up growth.

The truce is surely laudable. Without higher tariffs during the truce period, China gains time to push forward with reforms of its economy.

The yuan's exchange rate will become more stable and trade woes haunting some private businesses will be dispelled, reducing the risk of a precipitous fall in growth in the near term.

Still, a time limit of 90 days to sign a broader agreement still casts a shadow over the longer-term prospects for the trade relationship between the world's two largest economies. It's unclear if there will be a satisfying end to the trade tussle.

Instead of indulging in excess optimism over trade ties with the US, China should prepare for a future in which friction and cooperation co-exist.

There are also mounting worries about uncertainties lingering over the global environment, which will pile pressure on China's economy in 2019. Among the worries are moves to revamp the world trade order, notably an overhaul of the WTO, and growth anxieties that grip emerging economies.

In light of these challenges, it's crucial for the Chinese economy to tap into its inner strength. As the country reduces its reliance on foreign markets that are also becoming weaker in stimulating GDP expansion, there is a growing belief that China has no choice but to ignite its inner economic fires.

That calls for greater effort to spur innovation, lower personal and business taxes, and push for the private sector to step up.

In a fresh move, Wang Jun, head of the State Administration of Taxation, was quoted as saying in a statement on the administration's website on Monday that China will announce larger tax cuts to boost quality economic growth.

It's a positive step, but it should be just part of broad-based efforts by the Chinese government to bolster the economy as a potentially tumultuous 2019 nears.

The author is a reporter with the Global Times.


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