US Treasury Secretary Scott Bessent's skepticism and bearish stance on the Chinese economy have encountered a rather ironic twist of fate. China's GDP grew at a robust 5.4 percent in the first quarter, in sharp contrast with the US, where GDP decreased at an annual rate of 0.3 percent in the same period, the first decline since the first quarter of 2022. This juxtaposition not only challenges the narrative of China's economic fragility in the face of US tariffs but also raises questions about the endurance of the US economy amid the chaos sparked by tariffs.
Bessent told FOX Business' Maria Bartiromo on "Mornings with Maria" that people saw some very poor numbers out of China, according to the media outlet, but the facts are quite the opposite. China's GDP growth rate in the first quarter was higher than last year's average growth rate of 5 percent and also exceeded the same period last year, ranking among the forefront of the world's major economies.
In the first quarter, retail sales rose by 4.6 percent year-on-year, an increase of 1.1 percentage points from last year's full-year figure. Additionally, China's foreign trade in goods grew in the first quarter, reaching 10.3 trillion yuan ($1.41 trillion), marking the eighth consecutive quarter of surpassing 10 trillion yuan.
This achievement stems from a blend of key elements, including China's robust economic foundation, its increasing resilience, the unlocking of innovative potential, and the enduring influence of macroeconomic policies. Even amid a tougher and more complex global landscape, as well as internal challenges brought about by an economic transformation, the core strengths of China's economy stand firm, indicating a positive long-term outlook.
China's monetary authorities on Wednesday introduced new measures to further bolster stable economic growth. These measures include, but are not limited to, reducing the reserve requirement ratio (RRR) for financial institutions by 0.5 percentage points. Despite the global uncertainties triggered by US tariff policies, China possesses a comprehensive toolkit of policy measures to ensure the economy remains on a stable development path. As these policies continue to take effect, the economy will be able to gain the necessary momentum and room for growth.
Bessent's pessimistic outlook on China's economy sounds more like political rhetoric than an economic assessment, lacking in both economic theory and data support, and even contradicts current data. Undoubtedly, the US tariff policy has significantly disrupted the international trade order and China-US trade, inevitably posing certain challenges to China's economy. However, it is the US economy that should be of greater concern. The US economy contracted by 0.3 percent in the first three months of the year, marking a sharp decline from its performance in 2024.
The tariff policies of the US are producing outcomes that are opposite to what some politicians initially expected. One notable example is the country's trade deficit. The US Census Bureau and the US Bureau of Economic Analysis announced on Tuesday that the goods and services deficit was $140.5 billion in March, an increase of $17.3 billion from the revised figure of $123.2 billion in February. This sharp rise in the trade deficit is considered one of the reasons for the first contraction in the US economy since 2022 during the first quarter. Some media reports have suggested that this unprecedented spike in the trade deficit is largely due to companies boosting their imports of goods ahead of Washington's sweeping tariffs.
Regarding the US economy, the May CNBC Fed Survey revealed that the odds of a recession in the next year rose to 53 percent, up from 22 percent in January for the biggest two-survey increase since 2022. At this juncture, Bessent's criticism of the Chinese economy cannot help but raise suspicions about his motives. On the one hand, it seems designed to divert international attention from the vulnerabilities of the US economy under its current tariff policies.
On the other hand, it appears aimed at creating a public opinion climate favorable to the US for upcoming talks with Chinese officials, trying to support the false narrative that the Chinese economy is less resilient against tariffs than the US economy. However, such tactics cannot contradict the economic data mentioned above. Ironically, these figures do not support Bessent's pessimistic outlook on the Chinese economy. Instead, they further expose the vulnerabilities of the US economy in the face of Washington's tariff policies.
Asked to comment on the recent repeated US claims that China cannot bear the pressure brought by the imposition of high tariffs, Chinese Foreign Ministry spokesperson Lin Jian said on Wednesday that no external shocks can change the fundamentals of China's economy, which has a stable foundation, many advantages, strong resilience and great potential.
Lin said China has strong ability to withstand pressure and sufficient measures to safeguard its own legitimate rights and interests. It's necessary for American politicians to take note of this.
This article first appeared in the Global Times:
https://www.globaltimes.cn/page/202505/1333538.shtml