Stunning Trump Victory Sparks Trade Tensions: Urgent Stimulus Expected to Shield China’s Economy
Flags of China and the U.S. flew in Shanghai during trade talks on July 30, 2019. Following Donald Trump’s victory in the 2024 U.S. presidential election, China is on edge over potential increased tariffs on its exports to the U.S., possibly reaching 60%. Previously, tariffs during Trump’s first term didn’t alter the U.S. as China’s top trading partner. Yet, new tariffs could hurt China as it depends more on exports amidst domestic economic challenges.
A former chief economist projected a potential $200 billion reduction in China’s exports, causing a possible 1% GDP drag. In response, China is expected to announce significant economic stimulus measures, including local government debt swaps and real estate support exceeding 10 trillion yuan ($1.39 billion).
Stocks in China and Hong Kong fell following Trump’s win, contrasting with U.S. markets that surged. Analysts suggest escalating tariffs may particularly affect China, given the bipartisan U.S. support for tech restrictions against China.
Potential Republican control of Congress might expedite protectionist policies, adding global economic risks. With tariffs possibly enforcing a 10% increase, forecasts suggest Beijing’s GDP growth could drop by 0.3 to 0.4 percentage points over two years.
Despite these challenges, China continues to shift its export market focus, gaining influence in non-U.S. regions like ASEAN. This adaptability underscores China’s enduring global trade strength, even as it prepares for heightened tariffs. Analysts believe China will strategically implement gradual stimulus rather than a sudden large package.
Original Story https://www.cnbc.com/2024/11/07/trump-win-and-threat-of-more-tariffs-raises-expectations-for-more-china-stimulus.html
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