Two battlefields crucial to China's economic transformation

Source:Global Times Published: 2020/2/19 20:58:40

Workers at Yuyue Home Textile Co produce masks with a self-developed antibacterial new material and filter cloth in Binzhou, East China's Shandong Province on Sunday. The new material can both prevent bacteria and viruses. Over 3,000 companies in China added "masks, protective clothing, disinfectant and thermometers" to their business scope between January 1 and February 7, according to the Xinhua News Agency. Photo: cnsphotos

During this critical time in China's battle against novel coronavirus pneumonia (COVID-19) and as the country is trying to revive business activities, the US has not loosened its pressure on the Chinese economy, complicating the battle against downward pressure.

While China is currently focusing most of its attention on the domestic front, that doesn't mean recent US gambits - such as revoking WTO subsidies and filing new charges against Chinese tech giant Huawei - should be taken lightly. Moreover, the Trump administration may be considering new measures to limit China's access to US chipmaking equipment, according to media reports.

Undoubtedly, the Chinese economy is facing a grim situation on two battlefields. It not only needs to restart its economy due to the epidemic, but also needs to break the high-tech cutoff imposed by the US.

China must define its bottom line before moving forward in these battles.

In order to ensure the stability of the overall economy, the central government will certainly roll out a slew of monetary easing policies in the months to come. However, it is worth noting that we should make good use of the loose monetary policy to encourage and accelerate research and development, so as to promote the upgrading and transformation of manufacturing, instead of continuing to construct low-end industries. 

Even in the face of persistent US containment measures, China should maintain industrial upgrading and transformation as its main direction for achieving high-quality growth. After all, continuous technological advancement is the key to maintaining an economy's endogenous growth momentum.

Meanwhile, moderate infrastructure investment is still crucial to lift the economy during these difficult times, though it must be made in a precise and targeted manner. In the past, floods of investment have led to eventual drags on the economy, which should be avoided this time around. 

But in terms of technological upgrade and catch-up projects, investment should always be increased. For instance, we should still invest heavily in the development of new telecommunications infrastructure, which can not only accelerate the development of relevant industries, but can also quicken the pace of 5G technology advancement.

Finally, measures should be taken to prevent local authorities from improving local economic achievements by boosting real estate sectors or spending on other non-essential projects.

At present, China's economic transformation is at its most critical moment. Just as it did with epidemic prevention and containment, the central government should step up control efforts to keep its economy moving forward despite uphill battles.

Posted in: GT VOICE

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