China’s economic ‘resilience’ without further stimulus questioned after Donald Trump’s US tariff threats
- US president announced on Sunday that the 10 per cent levy on US$200 billion of Chinese goods would increase to 25 per cent on Friday
- People’s Daily claimed ‘China’s economic development is resilient enough’ to meet growth target range of 6 to 6.5 per cent for 2019; economists are not so sure
China may need to consider introducing even more economic stimulus, while its top decision-making body headed by President Xi Jinping could be forced to revisit the old playbook it hastily walked away from just last month, to counter the increased tariff threats from US President Donald Trump, according to economists.
Barclays Bank economists in Hong Kong estimate that an increase from 10 per cent to 25 per cent on US$200 billion of Chinese imports, a situation set to become reality on Friday, would likely drag down the country’s gross domestic product growth rate by 0.3 to 0.5 percentage point over the next 12 months.
But the imposition of a 25 per cent tariff on the remaining US$325 billion of Chinese products, a threat included in Trump’s tweet on Sunday, could reduce China’s growth rate by an additional 0.5 percentage point, pulling the figure below the government target.
Wang Tao, chief China economist at UBS, was even more pessimistic, estimating that a continuing trade war with the US could cut China’s economic growth rate by 1.6 to 2 percentage points over the next 12 months, according to an interview with The New York Times.