China is ready for the trade war 2.0 with Trump
China is ready for the trade war 2.0 with Trump
In summer 2018, President Donald Trump started a Trade War gave that it could soon overtake the United States as the largest economy in the world.
China's economy in change
Today, since Trump is about to recapture his presidential office, it turns out that China's economic strength has decreased significantly. The country sees itself challenges through real estate crises , debt and Deflation . Signs indicate that China is not willing to face another conflict.
strategies for coping with the challenges
But the appearance can. The Chinese leadership has developed a better understanding of how the designated president deals, and is therefore better equipped to deal with the real way to deal with the real way to deal with his plans for the introduction of tariffs of over 60% exported goods exported to the USA. This should be done through a combination of trade diversification, targeted retaliation measures against US companies and support domestic consumption.
trade relationships and changes
according to Dexter Roberts, author of the Trade War Newsletters and Senior Fellow am Atlantic Council, China has been actively trying since the first trade crisis, which was continued under President Joe Biden to reduce from the USA. In the merchant data area, these changes can be clearly seen, in record time.
In 2022 the bilateral trade recorded a Rekordhoch . But last year Mexico China overtaken as largest exporter to the United States. China's exports to the United States fell by 20% to $ 427 billion last year.
China's reaction to possible tariffs
Wang Shouwen, international trade negotiator and Vice Minister of Trade, said at a press conference: "We have the ability to cope with and ward off the effects of external shocks."
targeted retaliation measures
do not expect simple retaliation measures, warned Liza Tobin, Senior Director of Economics at the Special Competitive Studies Project, a Think Tank, close to the USA. Instead, Beijing's answer is expected to be more targeted and asymmetrical.
"You are already under pressure foreign companies in China and could increase the pressure on US companies by selecting companies that they want to push out of the Chinese market anyway," continued Tobin.
In September, Beijing announced that it examined the fashion retailer PVH Corp, the owner of Calvin Klein and Tommy Hilfiger, because he had refused to obtain cotton from the Xinjiang region - an area in which Beijing because of massive human rights violations is criticized.
the look into the future
The reactions to US companies or Agrar industries are more likely US state bonds, say economists. A sale could also damage China's own interests.
A devaluation of the currency could help Chinese exports if Trump introduced new tariffs, but analysts do not believe that this is a current option.
"The responsible persons most likely do not consider it meaningful and will take other measures instead," said Sean Callow, senior foreign exchange analyst at ITC Markets.
The Chinese government has recently signaled that it would like to strengthen confidence in its stock markets to present both domestic investors and China as an attractive investment location.
crank consumption expenditure
However,China can also rely on a large internal market. "The best answer to Beijings to tariffs is to solve his own problems by restoring trust among Chinese entrepreneurs, making 90% of urban employment and most of the innovation," said Rothman. "This would strengthen the trust of consumers and lead to higher domestic consumption, which would alleviate the effects of weaker exports to the USA."
In a recently published report, Larry Hu, chief economist at Macquarie Bank, found that extensive measures may have to be waiting for Trump's customs duties, which could be the case in January. "If exports break in, the political decision -makers have no choice but to raise the incentives to the next level," said Hu.