NetEase News Financial Think Tank recently interviewed Yu Miaojie, Representative of the National People’s Congress, member of the Standing Committee of Liaoning Provincial People’s Congress, deputy secretary of the Party Committee and President of Liaoning University. The interview is reproduced here:
Yu Miaojie China’s trade surplus will be over five trillion in the year 2023!
Key points:
1. I am optimistic about the overall situation of import and export trade this year. I think the total value of China’s import and export trade this year will be higher than last year’s 42 trillion, and the trade surplus will remain above five trillion.
2. The global trade situation has formed around three pillars, comprising the RCEP area with China, the North American Free Trade Area with the United States, and the European Union with Germany. Behind each are unique and supported supply and value chains.
3. As the most economically important country of the RCEP, China has the only whole industrial chain in the world. We have 41 industrial categories and 666 industrial subcategories, and the industrial categories are complete. China promotes a new development pattern in which the domestic macroeconomic cycle is the main body of development while the domestic and international cycles promote each other. This structure effectively helps avoid the risks of chain breakage and geopolitical shocks.
The full interview:
In 2022, China’s foreign trade import and export data is very good. The total annual trade value reached 42 billion, and the trade surplus exceeded five trillion, which is better than what we thought before. Global economic growth will slow down further this year. But can China’s import and export trade maintain a better growth momentum? I think the answer is very clear, absolutely, it can.
There are several reasons. Our early judgment was that there would be a big recession in the global economy in 2023. However, it seems that this judgment should be readjusted now. It should be said that the global economy will face certain challenges in 2023, but it is too serious to make a judgment that the global economy will decline in 2023. In other words, the global economy will face a certain impact in 2023, so there will be some weak external demand in China. However, this relatively weak external demand does not mean that China’s exports have no opportunities. From the spirit of this year’s Central Economic Work Conference, we can draw the conclusion that the best way to deal with weak external demand is to create effective demand through high-quality supply. This understanding is very important and points out the fundamental way to deal with weak external demand.
Traditional Keynesian economic theory states that when effective demand is insufficient, stimulating the economy to promote economic development requires stimulating demand. But now, additionally, it is understood how supply factors create demand.
For example, the mobile phone market was saturated around 2004. At that time, Nokia and BlackBerry dominated and the mobile phone market was saturated.
However, due to the emergence of iPhone and the smart phone, the mobile phone industry has been redefined, as the function and users of this product have changed. Therefore, mobile phones have become a brand-new industry. The global mobile phone market was eliminated. Non-intelligent mobile phones were replaced by smart phones, and so the potential user market grew, reaching about seven billion.
This is a very good example of high-quality supply creating effective demand. It also points out the direction for China’s exports. If China wants to maintain high-quality and high-level exports, we must achieve high-quality supply through supply-side structural reform. That means improving the total factor productivity of enterprises, increasing the added value of products and improving product quality. In this way, we can effectively cope with weak international economic demand.
Therefore, I am optimistic about the overall situation of the import and export trade this year. I think the total value of China’s import and export trade this year will be above last year’s 4.2 billion, around 4.5 billion, and the trade surplus will remain above five trillion.
We can see that the digital economy has become a very important part of China’s economy. The central and local governments are vigorously promoting the digital industries and the digitalization of industries, by developing local economies through digital manufacturing and intelligent manufacturing. Cross-border e-commerce can effectively reduce communication costs. In the past, the two sides of trade were hampered, either through import and export companies or by needing face-to-face interviews with enterprises. Now, through e-commerce platforms, costs can be effectively reduced, and wider, more comprehensive, and faster information can be provided. Both the supply and demand sides can have a deeper and more comprehensive understanding of the global market based on access to vast sources of information. From this point of view, this is why I am optimistic about China’s economy and also China’s trade next year. In short, we can make up for the overall shortage of external demand by updating our industries.
At present, the world has formed around three trading blocs, the RCEP area with China as the central node, the North American Free Trade Area with the United States at its center, and the European Union with Germany at its heart. Behind these three blocs or pillars are unique and supported supply and value chains. The global industrial chain is characterized by short and flat supply and value chains. From China’s point of view, China, as the most economically important country within the RCEP, has the only whole industrial chain in the world. We have 41 industrial categories and 666 industrial subcategories, and the industrial categories are complete. China promotes a new development model in which the domestic macroeconomic cycle is the main body of economic development, while the domestic and international cycles promote each other. This economic model effectively helps China avoid the risks of chain breakage and geopolitical shocks.
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