China’s economic ascent set to continue unfettered

While facing strong headwinds from supply chain disruptions due to the coronavirus pandemic and Trump administration’ push to decouple, China remained as one of the world’s most attractive investment destinations in 2020.

Foreign direct investment ( FDI) into China’s mainland provinces hit a new record of 999.98 billion yuan in 2020, an increase of 6.2 percent year- on- year, the Ministry of Commerce announced on Wednesday.

As the whole world struggled with the pandemic throughout 2020, it is a loud statement for China to achieve such hefty FDI growth.

Given Biden’s would- be cabinet secretaries labeling China as a strategic competitor, it remains to be seen to what extent China’s stellar economic performance now, will help shape the Biden administration’s trade policy toward China. In any case, it is hoped that China’s economic achievements so far could serve as a reminder to Biden’s economic advisory team that a trade war won’t break the Chinese economy, but it may backfire to hurt the US itself and its businesses.

In the past four years, the Trump administration moved to impose unprecedented tariffs on Chinese exports as well as slapping sanctions on Chinese technology companies, in its bid to impede China’s rise.

While the Trump administration claimed that the tariffs were all about bringing manufacturing jobs back to America, the fact is that the US economy hasn’t benefited from its trade skirmishes with China.

According to a recent report released by the US- China Business Council, the trade war with China, rather than benefiting the US economy, has reduced the US economic growth and employment, leading to an estimated loss of 245,000 jobs in America.

The continuing trade tensions over the years have damaged the US businesses and ordinary households by raising consumer prices, dampening investment, while hurting company competitiveness and disrupting supply chains.

Undoubtedly, these protectionist trade measures have also caused pressure on the Chinese economy, sending shockwaves throughout its domestic manufacturing sector. But, all these negative factors failed to derail China’s ability to attract foreign investment, highlighting the resilience of the Chinese economy.

Despite the pressure from the Trump administration’s push for an economic decoupling, China managed to win non- stop market recognition in foreign investment, which is mainly because China has focused on what is more important. By putting the pandemic under effective control, China became the only major economy to bounce back from the virus fallout, while by continuing its opening- up agenda, China became one of the world’s most attractive investment destinations.

With no illusions about a reset of US- China economic and trade relationship under the Biden administration, some are concerned whether bilateral economic ties will fare better, given recent remarks by Biden’s cabinet nominees. Yet, China’s FDI data could reassure the whole country that no matter what the US government does, China’s economy will continue on a steady ascendance.