By Yin Lei
China can rise to the challenge of the ongoing trade war, experts pointed out last weekend at this year's China Wealth Forum held in the city of Qingdao.
They offered their analysis at the forum regarding the causes of the trade war.
The trade war is a result of a combination of economic and political factors, said Christoph Loch, director of Cambridge Judge Business School at the University of Cambridge.
In the face of this trade war, fighting back may not be that effective but a lack of it may result in more losses, he believed.
The current U.S. foreign policy stems from the political changes at home that are underpinned by the domestic public opinions, said Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC).
It remains to be seen how long this trade war can continue since it can also have a negative impact on its own economy, Fang pointed out.
Income disparity in the U.S. was worsening over the past four decades, with half of Americans seeing a decrease in their real income, according to a research by Joseph Stiglitz, a Nobel laureate in economics.
Zhang Yansheng, a researcher of the academic committee of the National Development and Reform Commission (NDRC), said that out of the current USD 34 billion of Chinese goods exposed to new U.S. tariffs, over USD 20 billion are produced by foreign firms operating in China.
President Trump thinks America's trade with the North American and European countries, which he believes to be unfair, has allowed its trade partners to reap more benefits, and he wants to address this issue with a trade war, he said, adding that these moves are rendering the global situation more complicated.
At present, a generally accepted consensus is that the direct impact of the trade war will be limited and what is important is how things will develop in the future.
The extra tariffs on USD 50 billion of Chinese exports may inflict a 0.12 percentage point decrease on China's economic growth. This move, plus the threatened 10 percent tariff on another USD 200 billion Chinese goods, may cut China's GDP growth by 0.45 percentage point, Zhang estimated.
He believed that China's economy, as it is increasingly propelled by innovation, has the potential, resilience and room for maneuver to rise to these complex changes.
This ability will lie in its efforts to fill the research and development (R & D) spending gaps across the country. In its seven coastal provinces, such spending already exceeds the organisation for Economic Co-operation and Development (OECD) average while in other regions the amount is far less, he said.
In the trade war, China's core interest is in trade while the U.S. is setting its eyes on investments, according to Chen Xingdong, the chief China economist at BNP Paribas Global Markets.
For China, the best course of action is to pursue reforms, set out the related policies for the next three to five years, and utilize its comparative advantages and huge consumption market, as he believed.
Other options he suggested included enhancing coordination with its neighbors and the European countries as well as further the internationalization of the RMB to boost global confidence in China.
