This scenario becomes even more complicated for China, which is already facing economic difficulties, such as the crisis in the real estate sector and slowing growth, making its exports more vulnerable.
Eight years ago, announced its intention to start a trade war against a country considered an economic giant. He is currently preparing to intensify this dispute by proposing additional tariffs that could exceed 60% on all imports from China. This scenario becomes even more complicated for China, which is already facing economic difficulties, such as the crisis in the real estate sector and slowing growth, making its exports more vulnerable. Despite the difficulties, China has considerable resources to stimulate its economy. Recently, the Chinese government launched a $1.4 trillion bailout plan that will allow local governments to refinance their debts at lower interest rates. Furthermore, China has established itself as a leader in the supply of electric vehicles and clean energy technologies, giving it a strategic position in expanding markets, regardless of tariffs imposed by governments. .
Over the past six years, China’s dependence on the American market has decreased significantly, with its share of US imports falling from 20% to 13%. In search of new opportunities, China has turned to markets in Southeast Asia and Latin America. Chinese leaders are also shifting their purchases of agricultural commodities, opting for suppliers in Brazil and Argentina rather than the United States. If Trump implements his tariff threats, Chinese exports could suffer a drop of up to 8%, which would result in a 2% reduction in China’s annual economic growth. Currently, the country is responsible for 17% of global exports and has an expanding private sector that represents around half of its total exports.
To mitigate the impact of the possible drop in exports, the Chinese government can increase spending, using its state banks. The structure of the Chinese Communist Party allows it to adapt quickly to crises, which can be an advantage in times of commercial adversity. Xi Jinping, President of China, has consolidated his power and implemented the Made in China 2025 plan, which aims to increase the country’s capacity in advanced technology sectors. Although China controls a significant share of global clean energy production, it still faces challenges in computer chip manufacturing, a crucial sector for modern technology.
Published by Sarah Paula
*Report produced with the help of AI
