People's Daily of China Confident "Tariff Shock Fully Predictable"

Emphasizing "Strong Resistance Capability"

China, which has adopted a counter-response policy to the high tariffs imposed by U.S. President Donald Trump, is internally boosting 'confidence.'

The People's Daily, the official newspaper of the Chinese Communist Party, published a commentary on the front page on the 7th (local time) titled 'Focus Energy (精力) on Doing Our Own Work Well,' arguing that "although the U.S. is trying to create a shock by abusing tariffs, the sky will not fall."

It further stated, "The recent 34% tariff increase by the U.S., in addition to previous tariff hikes, will severely suppress bilateral trade," adding, "In the short term, our exports cannot avoid negative impacts, but we have strong resistance capabilities against the shock of U.S. tariff harassment."

The media noted that as a result of China's efforts to diversify its markets, the proportion of exports to the U.S. in total exports decreased from 19.2% in 2018 to 14.7% last year, saying, "The decrease in exports to the U.S. will not have a subversive impact on the overall economy."

The People's Daily explained that domestic growth in investment and consumption exceeded expectations in January-February this year, and that exports and the Purchasing Managers' Index (PMI) for manufacturing and services were also positive, predicting that "in the first quarter, growth of over 5% (exceeding the annual economic growth target of 'around 5%') is expected."

It continued, "We have measures against the U.S.'s reckless tariff proliferation, and we have accumulated rich experience in struggle during the 8-year trade war with the U.S.," asserting that "although the international market generally sees U.S. tariffs as exceeding expectations, the Party Central Committee has already anticipated the new economic and trade suppression from the U.S. against us, fully predicted the shock that will be caused, and has ample response plans prepared."

The People's Daily stated that the decision made at last month's annual major political event, the Two Sessions (National People's Congress and Chinese People's Political Consultative Conference), to set this year's fiscal deficit rate at a record high of around 4% and to use national bond funds for strategic industries, is part of an 'emergency policy' against U.S. blockade and oppression.

It also reported that "depending on future needs, monetary policy tools such as the reserve requirement ratio (RRR) and interest rate cuts have sufficient room for adjustment and can be introduced at any time," and that there is room to further expand fiscal deficits, special bonds, and special national bonds.

The People's Daily added that "extraordinary efforts will be made to stimulate domestic consumption, and prepared policies to stabilize the capital market and market confidence will be introduced one after another," and that "governments at all levels will support companies in adjusting their business strategies, help maintain U.S. trade as much as possible, and guide the development of domestic and non-U.S. markets."

Park Soo-rim, Hankyung.com reporter paksr365@hankyung.com