China’s chances of escaping the trade conflict with the U.S. with only minor damage to its economy just got slimmer.
On Friday, U.S. President Donald Trump doubled down on his threats to impose higher tariffs on the nation’s goods, saying he’s ready to tax all imports “at short notice.” While economists see the immediate impact of trade tension as limited, the effect on economic confidence may be larger, warned former People’s Bank of China Governor Zhou Xiaochuan.
Trade data for August released Saturday echoed both the cause and effect of the standoff with the U.S. — the surplus with the U.S. rose to a record, while overall export growth slowed. A lone bright spot may be faster-than-expected import growth, signaling that domestic demand in the world’s second-largest economy is holding up for now.
“With further large-scale U.S. tariff measures imminent, Chinese exporters will be hit hard and China’s GDP growth rate in 2019 is likely to be dented,” said Rajiv Biswas, Asia Pacific chief economist at IHS Markit in Singapore. “If the U.S. keeps ramping up its tariff measures against China, the export sector will face a long, hard road ahead despite government measures to mitigate the impact.”
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