Trade war: how will Donald Trump’s tariffs on US$200 billion of goods affect China’s GDP?
Analysts make their forecasts as newly expanded trade war raises questions about potential risk to Chinese economy
The US’ latest announcement of tariffs on US$200 billion worth of Chinese products may knock about half a percentage point off China’s growth rate, according to officials and economists.
That figure may be manageable, but the real challenge for Beijing in an escalating trade battle with the US is that China’s manufacturing base, which helped to underpin the country’s economic boom in the past four decades, may start be harmed, they said.
Liu Shijin, the former vice-president at China’s Development Research Centre – a think-tank under the State Council, China’s cabinet – and an economic policy adviser to China’s leaders, said China finds it easier to manage “direct economic impact” from the trade war than to shore up market confidence.
“The direct impact from the trade war is not that significant; the significance is its impact on sentiment and expectations,” Liu told the World Economic Forum in the northeastern Chinese city of Tianjin on Tuesday.
His comments came after US President Donald Trump announced that the US will apply a 10 per cent tariff, rising to 25 er cent on January 1, on US$200 billion of Chinese products from next Monday, significantly widening the scope of the trade war.