China Bases Its Growth on ‘Innovation-Driven Productivity,’ While U.S. Is ‘Forging Bubbles’
Sept. 10, 2019 (EIRNS)—A Sept. 9 Global Times editorial headlined “China’s Economy Continues To Grow,” emphasizes that, in the current trade warfare between the U.S. and China, China’s strength is that its economy is based on “innovation-driven productivity growth,” and that the U.S.’s weakness is that “innovation is stagnant” and that “the stock market is at the core” and that its “bubbles could burst at any time.”
While reiterating the familiar Chinese arguments about how they will not allow trade pressures to affect their core interests, and that their national strength is based on the population’s support for the government’s policies, the editorial is particularly insightful on the underlying economic policy issue of innovation vs. speculation.
“As the global economy and trade face a downturn and China is in the frontline of a trade war, it’s not surprising for China to have unsteady foreign trade. But this doesn’t reflect the fundamentals of the Chinese economy. China’s economy is undergoing great structural adjustments, transiting from being investment-driven to innovation-driven and from being foreign trade-led to consumption-led. Although the trade war has led to short-term chaos in the Chinese and world market chains, China’s foreign trade has increased in many ways, particularly in countries along the routes of the China-proposed Belt and Road Initiative. Besides, the trade war has further stimulated China’s structural adjustment. China is continuing infrastructure development and accelerating innovations.”
The editorial then turns to the U.S. economy.
“When innovation is stagnant, the U.S. economy comes to a halt and grows only by forging bubbles. Finance is the U.S. economy’s pillar, with the stock market at the core. Americans are sensitive to slight changes in data, because the bubbles could burst at any time.”
Under these conditions, the editorial summarizes the policy that China is following: “Having the world’s fastest-developing productivity, China also focuses on high-quality economy with a reliable timetable and road map supported by the Chinese people’s demand for a better life rather than the U.S. market.”