Chinese Economy in the Conditions of Trade War

143
DOI: 10.20542/0131-2227-2020-64-6-76-84

L. Novoselova (novoselova@ifes-ras.ru),
Institute of Far Eastern Studies, Russian Academy of Sciences (IDV RAN), 32, Nakhimovskii Prosp., Moscow, 117997, Russian Federation

Abstract. The article discusses internal and external factors affecting the growth and structure of the PRC economy at the present stage. Currently, China has found itself in a complicated position requiring a parallel solution of two major tasks: the steady transformation of its development model in order to create a modern economy based on advanced technologies and innovations, as well as the restructuring of foreign economic relations and regrouping among the main trading partners in connection with the ongoing US-China trade conflict. The PRC leadership has taken a number of measures to maintain stable economic growth, including monetary easing, reduction of tax burden on the economy, promotion of public-private partnership, active attraction of foreign investors and creation of free trade zones. The PRC Law on Foreign Investments was adopted in March 2019 and entered into force starting from 2020. In accordance with the new law, foreign enterprises obtain national status at all stages of the investment process. The law significantly enhances the legal protection of foreign entrepreneurs. However, despite all efforts of the government main socio-economic indicators demonstrate the continuation of the downward trend prevailing in the PRC in previous years. At the same time, certain positive structural changes that have occurred in the economy have to some extent mitigated the effects of the slowdown in China’s economic growth. Both China and the United States incur losses caused by mutual application of trade sanctions. The ongoing Sino-US negotiations are aimed at finding a compromise solution acceptable for both sides. As a result, in January 2020, after 12 rounds of negotiations, the Chinese-American economic agreement was signed, representing the first phase of the trade deal between the two countries. However the parties face a difficult and, most likely, lingering prospect of resolving their trade and economic contradictions within the second phase of the negotiation process.

Keywords: China, growth rates, structural adjustment, countercyclical policies, US-China trade war, trade deal


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For citation:
Novoselova L. Chinese Economy in the Conditions of Trade War. World Eonomy and International Relations, 2020, vol. 64, No 6, pp. 76-84. https://doi.org/10.20542/0131-2227-2020-64-6-76-84



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