usa.chinadaily.com.cn
China Favors Stimulus Over Currency Devaluation to Counter US Tariffs
Facing significant export challenges due to US tariffs, leading Chinese economists advocate for a 1 trillion yuan ($137.2 billion) stimulus package to boost domestic consumption, rather than renminbi devaluation, to mitigate negative economic and geopolitical consequences.
- How might a sharp renminbi depreciation impact China's trade relationships with countries beyond the US?
- A weakening renminbi, while potentially boosting US exports, could negatively affect investor sentiment and create trade friction with other partners like Europe and Japan due to a stronger euro. Therefore, a large domestic stimulus, exceeding 1 trillion yuan, is suggested to offset US tariff impacts and send a signal of responsible trade policy.
- What policy response do leading Chinese economists recommend to counter the negative effects of US tariffs on Chinese exports?
- Despite US tariffs creating a significant export challenge for China, leading economists advise against sharp renminbi depreciation. Instead, they propose a pro-consumption stimulus package exceeding 1 trillion yuan ($137.2 billion) alongside export and worker subsidies. This approach aims to mitigate the negative impacts on exports while maintaining exchange rate stability.
- What are the potential long-term economic and geopolitical implications of China's chosen response to US tariffs, focusing on exchange rate management and domestic stimulus?
- Maintaining renminbi stability is seen as crucial for preventing one-sided expectations and capital outflows. The proposed stimulus package signals a commitment to domestic growth, minimizing reliance on export-led growth and potentially reducing future trade tensions by avoiding cost shifting to other trading partners.
Cognitive Concepts
Framing Bias
The article frames the debate as a choice between two options, largely favoring the argument for maintaining a stable exchange rate and implementing a stimulus package. The headline, while not explicitly stated in the prompt, would likely emphasize this framing. The introduction sets the stage by presenting the economists' view as the leading opinion.
Language Bias
The language used is generally neutral, although terms like "substantial external demand gap" and "dampen investor sentiment" might carry slightly negative connotations. However, these are used to describe economic realities rather than express explicit bias.
Bias by Omission
The article focuses heavily on the opinions of economists and policy advisors, potentially omitting perspectives from businesses directly affected by the tariffs or from consumers who would be impacted by the proposed stimulus package. The impact on other trading partners beyond Europe and Japan is also not thoroughly explored.
False Dichotomy
The article presents a false dichotomy by suggesting that China must choose between currency depreciation or a large stimulus package. It doesn't explore alternative or combined approaches.
Sustainable Development Goals
The article discusses economic policies to mitigate the negative impacts of US tariffs on Chinese exports. A proposed 1 trillion yuan stimulus package aims to boost domestic consumption and support affected exporters and workers, thus promoting economic growth and protecting jobs. This directly contributes to SDG 8: Decent Work and Economic Growth, which promotes sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.