The Biggest Losers In a U.S.-China Trade War

Will a trade war crush the Chinese economy? Unlikely, said a panel of experts speaking at the Fortune Global Forum in Toronto on Monday. “The US-China conflict—it’s not a positive, it’s not something that is going to help growth [in China] but neither is it going to necessarily impact the overall macro economy,” said Jonathan Woetzel, a senior partner at McKinsey and director of the consulting firm’s McKinsey Global Institute. He explained that much of the trade war’s impact falls on global corporation that do manufacturing there—accounting for 40-50% of Chinese exports, and 70-80% of exports from the targeted machinery and electronics industries—and that the impact on China is “actually very minor.” He noted the stakes are higher for regional economies like those of Taiwan, Singapore and Malaysia. As for China: “The US consumer is a probably a much bigger factor than the US government in terms of the growth of the Chinese economy,” he said. The Chinese consumer is of course a major factor too. He notes the future growth of the country’s economy depends more than anything on them and their continued appetite for goods and services. (80% of China’s economic growth has come from consumer activity.)