General

New trends in international trade, as stated in the government work report, "current development faces many difficulties and challenges", and "uncertainty in the external environment increases.". Looking around the world, four major uncertainties in the external environment of China's economic development are frequent.

Changes in the geopolitical landscape have led to a rebalancing of global economic development. In the twenty to thirty years after the end of the Cold War, despite the fact that the world is not peaceful, within the framework of the purposes and principles of the United Nations Charter, international law, and basic norms of international trade relations, the bilateral and plurilateral relations among the five permanent members and major economic forces in the world have remained basically stable, and despite differences between them, they are still basically controllable. As NATO's military power continues to expand eastward, in 2018, US President Trump provoked a trade war with China. In 2022, the Ukrainian crisis erupted, and positive confrontation between China, the United States, Russia, and Europe increased. Today, the Biden government of the United States has joined forces with its allies to increase the pressure and sanctions against China and Russia. The United States has taken the lead in undermining its initiative to promote trade liberalization, investment facilitation, and economic globalization. It has strengthened decoupling and chain breaking actions such as "Friendly Shore Outsourcing", "Chip Alliance", and "Indo Pacific Economic Framework", making the world economy face readjustment. In 2023, the game between major countries may intensify, the pressure on the middle camp to "choose sides and stand in line" may increase, the global industrial chain supply chain may accelerate restructuring, and there is a high probability that developed economies will collectively fall into economic recession. The Chinese economy strives to promote each other through the dual cycle of domestic and international trade or be affected to a considerable extent.

Global inflationary pressures are dragging down the recovery and growth of the world economy. In the face of the grim inflation reality, the Federal Reserve, the European Central Bank, the Bank of England, and others have accelerated their monetary policy tightening and raised interest rates by 375, 200, and 275 basis points in 2022. However, inflation pressures in various countries have not significantly improved. In February 2023, a rare wave of large-scale strikes broke out in Britain, with high inflation being the most direct cause. In March 2023, the Federal Reserve announced a 25 basis point increase in the target range of the federal funds rate to 4.75% to 5%, the highest level since October 2007, in order to curb persistently high inflation, despite problems in the US banking system. From the perspective of the transmission path of inflation, under the impact of factors such as the impact on the global supply chain industry chain and the intensification of energy shortages due to the Ukrainian crisis, global inflationary pressure is likely to spread from the supply side to the consumer side. As the interest rate center of various countries moves upward and financing costs increase, corporate equipment investment and real estate investment will also be significantly pressured. Under the influence of high inflation and interest rate hikes, domestic demand and international trade in most economies are both facing pressure, or continue to drag down the recovery and growth of the world economy. Its external spillover effects are bound to affect the Chinese economy as well.

The global financial market as a whole is in an unstable region. As the Federal Reserve continues to raise interest rates, cross-border capital will continue to flow back to the United States. Affected by energy prices, European money market interest rates tend to rise. Japan and South Korea still face pressure from currency devaluation and capital flight. Looking forward to 2023, the world may usher in a turning point of interest rate hikes, risk-free interest rates may peak and fall back, and commodity prices may have insufficient action. The yield of US treasury bond bonds is expected to reach the peak, the yield of European treasury bond bonds still has room to rise, and the yield of Japanese treasury bond may remain stable. Asian stock markets are expected to finish bottoming, while global stock markets will remain volatile. Taking into account internal and external balance, the Central Bank of China has accurately and effectively implemented a prudent domestic monetary policy, giving better play to the dual functions of the total amount and structure of monetary policy tools. In March 2023, it will timely reduce the deposit reserve ratio of financial institutions by 0.25 percentage points to maintain a reasonable and sufficient liquidity in the banking system.

Technological nationalism restricts global technological cooperation and innovation. Western countries, mainly the United States and Europe, continue to strengthen export controls on their high-tech knowledge, technology, and products in international trade, in order to restrict access to key raw materials and innovative technologies by countries that compete with them in science and technology. For security reasons, the United States has strengthened its review of foreign direct investment, especially in relation to cross-border investment activities by high-tech enterprises, in accordance with the "Foreign Investment Risk Review Modernization Act" implemented in 2018 and the "EU Foreign Investment Review Regulations" implemented in 2020. Technical trade rules and technical standards such as those of the United States, the United Kingdom, and the European Union, especially the incorporation of domestic patents into international standards as standard essential patents (SEPs) in the United States, have reduced the efficiency of global technological exchange and cooperation. The Trade and Technology Council (TCC), created by the European Union and the United States, will widen the global technological divide and accelerate the imbalance in the balance of technological power between countries in the future. The US and Western crackdown on China's science and technology has hindered the global sharing of the achievements of human scientific and technological progress, but it has also inspired the determination and motivation of the Chinese people to accelerate the realization of high-level technology and self-reliance.