China will focus on domestic economy

Amid rising trade tensions, Chinese officials have stressed that the country will focus on domestic economic issues.

"As long as we do our job well, the domestic economy will operate smoothly and gradually move forward," Han Wenxiu, vice director of the Office of Financial and Economic Affairs of the Communist Party of China Central Committee, said at a press conference on July 19.

Asked about how to grow amid rising trade tensions, he said there are three areas the country needs to focus on: stabilizing the real estate market, accelerating the development of future and emerging industries, and boosting domestic demand.

The July 19 press conference came a day after China wrapped up its third plenum of the Central Committee. Details are expected to be announced in the coming days. But in a resolution issued after the meeting, officials called for strengthening the domestic technology sector and working to meet economic targets for 2024.

An unfinished real estate project of China Evergrande Group in Hebei (China). Photo: Reuters

US-China trade tensions escalated under former US President Donald Trump. Mr. Trump is running again this year and has threatened to impose a 60% import tax on Chinese goods if he wins. Last month, the US President Joe Biden administration raised tariffs on Chinese electric vehicles to more than 100%. The European Union (EU) has also made similar moves on this product.

In their post-meeting resolution and official comments, Chinese officials did not name any specific countries or regions. They only assessed the general political tensions, including a “temporary” drop in foreign direct investment (FDI).

"External uncertainties are increasing, but will not affect China's commitment and confidence in reform and opening up," said Mu Hong, vice director of the Office of Comprehensive Reform of the Central Committee of the Communist Party of China.

On July 19, Han also acknowledged that the economy is facing some challenges and called for "more effective and strong macroeconomic policies", such as improving governance and synchronizing growth in both urban and rural areas.

After decades of rapid growth thanks to reforms and opening up, China's economy has recently slowed. In the second quarter, the country's GDP grew 4.7% compared to the same period last year, slower than at the beginning of the year and lower than analysts' forecasts.

The figures underscore the huge challenges facing Chinese authorities as Beijing seeks to boost domestic demand amid a three-year property market slump, rising local government debt and weak corporate spending.

The world's second-largest economy is targeting growth of around 5% this year, an ambitious target that analysts say may require additional stimulus to achieve.