The United States recently provoked sino-us trade friction, temporarily manifested as a tariff war, there is no sign of detente. The us announced a 25 per cent tariff on China's $16bn product on July 7, and China responded immediately. The United States has also threatened to increase tariffs on $200 billion of Chinese products from 10 percent to 25 percent, or even on all of China's $500 billion.

In the face of the us threat and pressure, China's attitude has not changed: we are not willing to fight, nor afraid to do so, but have to fight when necessary to firmly defend China's core interests and the interests of the Chinese people. China's confidence comes from its confidence in its economic strength, its adherence to international rules and morality, its full preparation for countering trade bullying and its rational analysis of the impact of trade frictions. The impact of sino-us trade friction on China's economy is reflected in three aspects: foreign trade, attracting foreign investment and foreign investment, and macroeconomics. Overall, the effects on all three levels are limited and controllable.

In terms of foreign trade. According to the calculations of my research team, the 25% tariff imposed by the us on China's $50 billion products will reduce the growth rate of China's export to the us by 3.39 percentage points, but the growth rate of China's total export will only decline by 0.75 percentage points. If the us imposes 10 per cent tariffs on another $200bn of Chinese products, the growth rate of China's exports to the us will fall by 9.26 percentage points and the growth rate of its total exports will fall by 2.06 percentage points. If the us imposed a 25 per cent tariff as it threatened, China's export growth to the us would fall by 18.07 percentage points and its total export growth by 4.02 percentage points. In the most extreme scenario, if the us imposes a 25% tariff on all Chinese imports into the us, the growth rate of China's exports to the us will fall by 37 percentage points, and the growth rate of China's total exports will fall by 8.24 percentage points. From the perspective of Chinese imports, China's countermeasures against us imports of $50 billion would reduce its import growth from the us by 9.84 percentage points, while China's total import growth would decline by only 0.7 percentage points. Further, if China were to counter by imposing a 25% tariff on all us imports, the growth rate of Chinese imports from the us would fall by 25.75 percentage points and the total import growth would fall by 1.82 percentage points.

It can be seen that, although sino-us trade friction will have a greater impact on sino-us bilateral trade, it has a limited impact on the overall pattern of China's foreign trade. Sino-us bilateral trade is only one part of China's total foreign trade. Especially for imports, China imports only 7.08% of its total imports from the United States, and the impact of sino-us trade war on China's total imports is very small. Of course, the trade friction between China and the United States has a bigger impact on China's exports than on its imports. After all, China's exports to the United States account for 22.27% of its total exports. But even in the most extreme cases, where the U.S. imposes a 25% tariff on all Chinese exports, China's export growth is down 8.24 percentage points and its exports are only negative at 0.34 percent. China could well afford this negative growth in exports. Through the comparison with historical data, we can have a more intuitive feeling about this. In 2009, the worst year of the global financial crisis, China's exports grew at a negative rate of 16.01%. In 2015 and 2016, the negative growth rate of China's exports also reached 2.94 percent and 7.73 percent. The negative impact of the sino-us trade war on China's exports is not as severe as the decline in China's foreign trade in previous years, and China is apparently able to bear it.

At the level of attracting foreign investment and overseas investment. Among China's exports, the export of foreign-invested enterprises accounted for 43.19%. Foreign companies account for 70 percent of China's top 100 export companies to the United States. As a result, a trade war between China and the United States will affect the operation of foreign-invested enterprises in China, which may affect the confidence of foreign investors in China. But so far, China's use of foreign capital has not been negatively affected. China's actual use of foreign capital increased by 3.99 percent in 2017. In the first half of this year, China's actual use of foreign capital grew by 4.07 percent, even faster than last year's growth rate. The number of foreign direct investment projects (enterprises) approved by China increased by 27.8 percent year-on-year in 2017, and the growth rate in the first half of this year reached 96.6 percent. Of course, from the perspective of foreign investment, China's investment in the United States will be significantly negative. The United States has made clear in its report on the China 301 investigation that, in addition to the use of additional tariffs, Chinese companies will increase their investment restrictions on the United States.

In fact, the situation is clearly not conducive to the trump administration's plan to encourage U.S. companies to repatriate investment and attract foreign capital, and will naturally undermine its goal of attracting manufacturing backflow and creating jobs. The changes to the committee on foreign investment (CFIUS) being pushed by the us government could impose more restrictions on Chinese companies investing in the us, which would greatly affect Chinese companies' confidence in us investment. Indeed, the trend has been evident since trump's first year in office in 2017. China's investment in the us dropped significantly in 2017, according to a us Commerce Department report. Chinese companies completed just $1.8 billion in mergers and acquisitions and greenfield investments in the first half of this year, down more than 90 percent from the first half of 2017, according to a new report by rhodium.

Macroeconomic. The impact of china-us trade frictions on China's foreign trade and investment will naturally spread to the macroeconomic sector, affecting macroeconomic indicators such as GDP, employment, price level and exchange rate. According to the estimates of my research team, the impact of the us and China's $50 billion tariff action on China's GDP is only 0.028 percentage points, apparently small. Even if China and the us impose tariffs on each other's products, even by 40 per cent, the negative impact on China's GDP would be just 0.398 percentage points. In the case of a lesser impact on GDP, the impact on employment in China is certainly modest.

On the other hand, China's imposition of tariffs on products from the United States, such as soybeans, does affect its own prices, especially consumer prices. But estimates suggest that the impact of trade frictions on China's price rises is very limited. In addition, the statistics of the first half of the year showed that the consumer price rose by 2% year on year. Another key indicator of the macro economy is the exchange rate. At present, the RMB exchange rate has been affected by the trade friction between China and the United States. Recently, the RMB exchange rate has been depreciating against the us dollar. In the international horizontal comparison, people still have full confidence in China's economy and there will be no large-scale capital flight. Besides, the exchange rate itself is affected by the monetary policies of the two countries. Two-way fluctuations will still be the trend of the RMB exchange rate in the future.

To sum up, although sino-us trade friction does have a certain negative impact on China's economy, the overall impact is controllable, and the Chinese government is fully capable of responding by taking targeted measures.

First, we introduced measures to stabilize exports and committed to expanding imports. China has faced a tough export situation many times before this trade friction, and the Chinese government has accumulated a lot of experience in stabilizing the export situation. The Chinese governments at all levels will closely monitor the export situation of enterprises, pay more attention to market-oriented means, and stabilize export from the perspective of optimizing export structure and strengthening and improving export. For example, we should guide enterprises to explore more diversified export markets and make better use of new forms of trade. In terms of imports, the Chinese government has repeatedly committed itself to expanding imports. The first half of the year has introduced a number of tariff reduction measures, I believe the second half of the year will play a role. In November, China will also host the first China international import expo in Shanghai, which will surely play a great role in boosting imports.

Second, we will improve the business environment and diversify our outbound investment. While foreign capital is likely to be affected by the macroeconomic situation and trade frictions between China and the us, it is China's large market and business environment that foreign capital values more. The Chinese government is committed to improving the business environment. In recent years, China has made great progress and will continue to improve the technology transfer, administrative license and intellectual property rights that are of concern to foreign capital. In terms of foreign investment, Chinese enterprises do not have to invest in the us market. Other developed countries are also the direction for Chinese enterprises to invest abroad. Countries along the "One Belt And One Road" route are also very welcome to invest from China.

China's macroeconomic policies will remain forward-looking, flexible and effective. The state council, the ministry of finance, the people's bank of China and other departments will study in advance the problems that may arise in the operation of the macro economy, and deploy targeted countermeasures. To sum up, china-us trade frictions have a controllable impact on China's economy, and the Chinese government is capable of taking appropriate measures to defuse the negative impact of china-us trade wars.