A paradox will emerge if we simply look at the contribution of the demand factors to China’s GDP growth, says Cai Fang: the contribution of external demand to the country’s GDP growth stood at only 11% in 2019; it even fell below zero in many previous years...
In statistical terms, external demand means net exports, or total exports less total imports. So a question arises: does negative external demand mean that it is not important?
It even gives rise to a ridiculous idea that China only needs to cut down its imports so that exports can contribute more to GDP growth, which is nothing but a mercantilist conclusion. But the fact is far from that...
International trade remains an important contributing factor to China’s economic growth. This is why researchers have converted statistical concepts into economic concepts and re-estimated the contribution of external demands, which has important policy implications...
Hence, China should fully tap into its own comparative advantages, and the unique position, connection and resilience it has in GVC to cement its in-depth integration into the global division of labor and avoid decoupling or isolation from it.
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