Beijing (AFP) – China has a “plentiful” toolbox to avoid an economic slump in the second half of the year, its commerce minister said Friday as he admitted it faced a “very severe and complex situation.” Growth hit 5.2 percent in the second quarter, official data showed Tuesday, but analysts have warned that more must be done to boost sluggish domestic consumption as exports face the knock-on effects of global trade turmoil.
Retail sales rose far less than expected last month and were much weaker than May, suggesting efforts to kickstart consumption have fallen flat. “We are still facing a very severe and complex situation. Global changes are unstable and uncertain. Some of our policies will provide some new responses according to the times and circumstances,” Wang Wentao told journalists at a news briefing. “Our toolbox is plentiful, and we will be fully prepared.”
Asked specifically about China’s reliance on exports, Wang suggested the government was preparing policies to “further stimulate the momentum of our consumption development.” “China’s economy is improving, and the long-term fundamentals have not changed; the consumption market’s characteristics of great potential, strong resilience, and vitality have not changed,” he said. Wang also namechecked Beijing-based toymaker Pop Mart, whose Labubu monster dolls have become a must-have item internationally, adorning the handbags of celebrities such as Rihanna and Dua Lipa. “We are also promoting new forms of consumption…for example Pop Mart, these kinds of new trends, new fashions and styles…the Labubu phenomenon has swept the world,” he said.
Beijing is battling to shift towards a growth model propelled more by domestic demand than the traditional key drivers of infrastructure investment, manufacturing, and exports. That desired transformation has become more urgent since Donald Trump came to office. The US president has imposed tolls on China and most other major trading partners, upending trade norms and endangering Beijing’s exports at a time it needs them more than ever to stimulate economic activity. The two superpowers have sought to de-escalate their row after reaching a framework for a deal at talks in London last month, but observers warn of lingering uncertainty.
Wang said Friday that despite “storms and rain,” Washington remained an important trading partner. Even though China-US trade has declined proportionally for each country, overall bilateral trade has remained stable, Wang said. In a sign of progress, US tech giant Nvidia said this week that it would resume sales of its H20 artificial intelligence chips to China after Washington pledged to remove licensing restrictions that had halted exports. China’s commerce ministry acknowledged the US decision in a statement Friday afternoon, even as it called for Washington to “abandon its zero-sum mentality.”
“China believes that the United States should…continue to cancel a series of unreasonable economic and trade restrictive measures,” the statement read. Nvidia CEO Jensen Huang has met with Chinese leaders this week in Beijing, telling journalists Wednesday that his firm was “doing our best” to serve the country’s vast semiconductor market. Wang praised recent visits by Huang and other US executives on Friday, noting that the solid economic and popular basis for US-China cooperation “makes artificial decoupling and severing supply chains impossible,” he said. Yet an inconsistent tune has “severely impacted and disrupted normal trade cooperation between China and the United States,” said Wang. Since Trump’s first term, “the trend of the trade frictions provoked by the United States has had ups and downs,” he said.
© 2024 AFP
