2. Beijing’s Economy in 2018 and 2019: Analysis and Forecast

In 2019, both developed and emerging market economies experienced a mild slowdown in economic growth. The evolution of China–U.S. trade frictions largely determines the trend of economic development both in China and around the world. In 2018, Beijing’s economy maintained a stable growth, along with a modest rise of prices, rapid growth of emerging industries, increasing capacity for independent innovation, and significantly improved business environment. China–U.S. trade frictions have given rise to great uncertainty to Beijing’s economic growth. Based on an analysis of the theoretical origins and practical dilemmas of China–U.S. trade frictions, this report makes a pre-judgment on China–U.S. trade negotiations and then analyzes the impact of China–U.S. trade frictions on Beijing’s economy. The Schumpeter model was adopted for the design of a catch-up model between Beijing and the United States, followed by an empirical analysis. It leads to the conclusion that Beijing should prioritize the strategy of independent innovation to improve productivity. In addition, the report makes a forecast of Beijing’s economy in 2019.