Trump's Tariffs Taking Toll on Chinese Economy
Beijing maybe closer to seeking an agreement to end the trade war than many realize.
New reports appear to indicate that the Chinese economic picture is not as rosy as Beijing would like the world and the U.S. to believe. As The Wall Street Journal reports:
Beneath China’s stable headline economic numbers, there is a growing belief among economists, companies, and investors around the world that the real picture is worse than the official data. That has analysts and researchers crunching an array of alternative data — from energy consumption to photos taken from space — for a more accurate reading.
Their conclusion: China’s economy isn’t tanking, but it is almost certainly weaker than advertised. Some economists who have dissected China’s GDP numbers say more accurate figures could be up to 3 percentage points lower, based on their analysis of corporate profits, tax revenue, rail freight, property sales and other measures of activity that they believe are harder for the government to fudge.
In related news, Fox Business notes, “The American Chamber of Commerce in Shanghai said Wednesday U.S. companies are steering business away from China at an increasing rate amid the escalating trade war between Washington and Beijing. More than a quarter (26.5 percent) of the 333 respondents to AmCham’s annual survey said they have redirected investment away from China over the past year, up 6.9 percentage points from 2018.”
CNBC reports that China’s Ministry of Finance recently announced that it will “exempt 16 types of U.S. products from additional tariffs.” Meanwhile, China’s central bank has inserted another $126 billion into the economy, as the nation is feeling the tariffs squeeze. The New York Times observes that “the price of pork has been rising for months, and it is now nearly 50 percent higher than it was a year ago. … Consumers are frustrated, and officials are quietly expressing alarm as they fight the outbreak of a disease that is devastating the country’s pig population and causing the shortage.”
After China’s announcement, President Donald Trump announced, “At the request of the Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th Anniversary on October 1st, we have agreed, as a gesture of good will, to move the increased Tariffs on 250 Billion Dollars worth of goods (25% to 30%), from October 1st to October 15th.” This is “Art of the Deal” maneuvering to be sure, but did Trump really have to cite the communist takeover celebration as a reason for delay?
Finally, the months-long Hong Kong freedom protests have also had a negative impact upon the Chinese economy, as the city is an important hub of international trade for the country. Sen. Lindsay Graham argued, “We’ve just got to accept the pain that comes with standing up to China.” It’s imperative to know that isn’t for naught — that Trump’s tariffs are indeed having a significant impact.
Update Oct. 18: Reuters reports that “China’s third-quarter economic growth slowed more than expected and to its weakest pace in almost three decades as the bruising U.S. trade war hit factory production…”