[February 08, 2023](Epoch Times reporter Xu Yiyang interviewed and reported) The Institute of Economics of the Chinese Academy of Social Sciences recently released a report stating that China’s export growth rate is expected to turn negative in 2023. The Chinese Communist Party has officially admitted that export trade has irreplaceable strategic significance for factors such as economic stability and employment growth. In the past two years, China’s total import and export accounted for more than 20% to 30% of GDP. Analysts believe that the greater the ratio, the greater the impact on China’s economy and employment once a downturn occurs.
The Chinese Academy of Social Sciences said in a report that China’s export growth rate will turn negative, as net exports (decline) may be a drag on economic growth due to the impact of contraction in international demand and rise in the base. According to the report, in the first two years after the outbreak of the epidemic, China’s foreign trade exports achieved better-than-expected growth; however, affected by factors such as the continued tightening of monetary policies in some economies, global economic growth will slow down significantly in 2023.
With inflation likely to fall faster in some countries, the report said, prices areChina exportThe contribution to growth will also tend to decline. The report acknowledges that the role of net exports in boosting China’s economic growth this year may turn negative.
Lu Tianming, a political and economic commentator in the United States, believes that the negative growth of exports claimed by the Chinese Academy of Social Sciences is actually a decline. He said that there are many factors that lead to the decline, and the impact of the inflationary decline mentioned in it must be there, but in essence it is far more than that.
On February 5, Lu Tianming said in an interview with The Epoch Times reporter that in the first two years of the outbreak of the CCP virus (new crown virus), China’s exports increased dramatically. This is because there were also shutdowns in foreign countries at the beginning, but the government was distributing money, and people had money to spend without going to work, so consumption skyrocketed, and China’s exports also increased.
“Then inflation became particularly severe and prices soared, which was tantamount toChina exportis favorable, so its exports have been rising. “Lu Tianming said, “But because inflation is too high, since last year, foreign countries have implemented a monetary tightening policy and have been raising interest rates to suppress the inflation bubble. So what the Chinese Academy of Social Sciences said is just one point, saying that this is not good for China’s exports, which itself is right. “
But Lu Tianming said that in fact, the bigger reason is that foreign companies have transferred the industrial chain away from China. “In the past two years, the CCP’s epidemic control has often led to the interruption of the supply chain. In particular, the CCP has also used the supply chain as a political bargaining chip to pose a threat to the security of Western countries. These factors have led to the transfer of the industrial chain in the later stage of the epidemic. This is a very The big impact.” He said, “People no longer rely on China to produce these things, and they have moved to those countries in Southeast Asia.”
“In addition, the labor shortage caused by China’s population decline is also a major factor.” Lu Tianming said, “China’s demographic dividend is gone, and labor prices have been rising in recent years. Therefore, many factors have contributed to foreign capital’s determination to completely shift the industrial chain. Go. This is also one of the most important reasons for the decline in China’s exports, not just the tightening of overseas monetary policies.”
The decline in exports will impact small and medium-sized private enterprises and affect employment
The CCP’s official media “Economic Daily” published an article in October 2022 stating that the figures released by the CCP’s State Administration for Market Regulation showed that by the end of August 2022, the number of private enterprises in China had quadrupled from the 10 years since the end of 2012. The proportion of enterprises in the total number of enterprises increased from 79.4% to 93.3%.
The article stated that China’s private enterprises have played an important role in stabilizing growth, promoting innovation, increasing employment, and improving people’s livelihood, and have become an important force in promoting economic and social development.
Lu Tianming said that there are many private enterprises and small and medium-sized enterprises in the Jiangsu, Zhejiang and southeast coastal areas of China. They all rely on foreign trade orders to survive, and have even formed an entire industrial chain, doing business one by one. If China’s exports decline, their business will disappear, and the impact will be very large.
“The number of these private enterprises in China is huge, and they are the most important part of solving the social employment problem, even far higher than the proportion of state-owned enterprises.” Enterprises without orders will be on the verge of bankruptcy, and a large number of workers will lose their jobs, which will lead to a soaring social unemployment rate, which will further affect social stability.
The higher the proportion of total import and export trade in GDP, the greater the impact
Consumption, investment, and export are the “troika” used by the CCP government to drive economic growth. Xinhua News Agency, the mouthpiece of the Communist Party of China, issued an article in May 2021 stating that as one of the “troika” driving economic growth, export trade has irreplaceable strategic significance for economic stability, employment growth, and improvement of international competitiveness.
In the past two years, China’s total import and export accounted for a high proportion of GDP (Gross National Product). In a report released by the Bank of China Research Institute on February 14, 2022, it was stated that in 2021, the continued growth of exports exceeding expectations will become an important support for China’s economic growth. The contribution rate of net exports of goods and services to GDP reached 20.9%, driving GDP growth by 1.7 percentage points.
In January 2021, Ning Jizhe, then director of the National Bureau of Statistics of the Communist Party of China, said that in 2020, the contribution rate of China’s net exports of goods and services to economic growth will still be positive. He said that in 2020, China’s total import and export volume is equivalent to more than 30% of GDP, and the proportion of total import and export volume to GDP is relatively high among major countries.
He also said: “Great countries generally focus on domestic demand, and realize economic circulation under open conditions. Our proportion is higher than that of the United States and Japan, which are major economic powers.”
In this regard, Lu Tianming said that exports account for a large proportion of China’s economy, “the greater the proportion, the greater the impact of its current downturn on the Chinese economy.”
Lu Tianming said that China’s domestic demand has long been sluggish, that is to say, the common people have no money, especially during the two years of the epidemic. “Let’s not talk about the ‘two carriages’ for the time being, at least exports account for a large part. China’s import and export trade accounts for a very high proportion of GDP, while countries in Europe and the United States are relatively much smaller. Why are they so much smaller? They They are all a healthy economy dominated by domestic consumption. Its total wages account for a much higher ratio of GDP than China, so their people have enough money, and their normal living consumption can maintain the country’s economic operation. But in China It’s unrealistic, it’s not a healthy economic structure, and residents’ spending power is much lower.”
For example, he said that the CCP once carried out economic retaliation against Taiwan. In the end, it was discovered that the goods the CCP bought from Taiwan accounted for a very small proportion of Taiwan’s GDP. Even if it did not buy anything, the economic impact on Taiwan would be limited.
“However, exports account for a large proportion of China’s economy.” Lu Tianming said, if the CCP sets the GDP growth target at 5%, theoretically speaking, the exports, investment and consumption in the “Troika” will also increase every year. Each needs to grow by about 5%, and on average can achieve 5% GDP growth. “However, if the 5% of exports is gone, does not grow, or even falls by 5%, then the other two items may have to increase to 10% to drive the overall GDP growth to 5%, which is very difficult.”
He also said it wasn’t just exports that fell, but imports as well. He said: “China imports some raw materials. It imports and processes them and then exports them to earn a processing fee at home. Now that the industrial chain has been removed, part of the imports like this kind of processing with supplied materials will also be reduced; the other part is The entire economy is going down and domestic demand is sluggish, so the import of consumer products will also fall. People have no money, life is getting more and more difficult, and consumption of high-priced foreign products will also decrease.”
“So the greater the proportion of imports and exports in the whole, the greater the impact on the overall economy and GDP if it falls.” Lu Tianming said. ◇
Responsible editor: Lian Shuhua#