TAIPEI (Taiwan News) – China is clearly under economic duress as its economy slows and the next round of 25 percent tariffs targeting US$200 billion worth of Chinese goods are made ready for launch in Washington.
China’s stock market slumped to a 31 month low on Wednesday, Sept. 12. Things are likely to continue to slow with Donald Trump’s threat made over the weekend that an additional round of tariffs targeting US$267 billion are already being lined up to follow the US$200 billion expected to go into effect within days.
If another US$267 billion worth of Chinese goods are targeted by the U.S. before the year’s end, it would amount to essentially the entire annual volume of goods imported from China.
Chinese funded publications and news agencies around the world continue to insist that the trade war’s impact on the Chinese market is insignificant, but the numbers and the statements of China’s leadership tell a different tale.
Chinese Vice Premier Hu Chunhua speaking at a World Economic Forum event in Hanoi on Wednesday said that:
"protectionist and unilateral measures are gravely undermining the rules-based multilateral trading regime, posing a most serious hazard for the world's economy."
Earlier in Vladivostok, Russia on Tuesday, Sept. 11, at the Eastern Economic Forum, Xi Jinping praised China’s stable and improving ties with Russia, while both he and Vladimir Putin criticized “protectionist trade policies” without mentioning Trump by name, reports the Guardian.
Xi stated at the forum:
“There are deep and complex changes underway in the international situation, the politics of force, unilateral approaches and protectionism are rearing their head.”
Clearly, Chinese officials are weary of the impact that their country will likely sustain if the trade war continues and Chinese companies are suitably penalized for years of unfair trade practices.
It is also important to note that things are only getting started in the trade conflict, and unless China is willing to make some major concessions, and soon, then the world is likely to witness a protracted conflict lasting years.
One researcher at Taiwan’s Chung-Hua Institution for Economic Research, Roy Chun Lee says that "the historical example of the U.S.-Japan economic conflict suggests that the U.S.-China trade war could last at least 10 years,” reports Taiwan Business TOPICS.
According to many recent reports, Taiwanese companies are already beginning to shy away from the Chinese market because of the likelihood that their products manufactured in China will be targeted by the Trump administration.
Many local companies are considering establishing manufacturing facilities across Southeast Asia, and there are more than a few international companies based all over the world that are probably looking to do the same.
The longer the trade war continues the less attractive China will become as a manufacturing base for international companies, making other emerging markets like Indonesia and India preferable locations for manufacturing.
This may be bad news for China, but despite what Chinese funded media outlets might want people to believe, it is good news for the redistribution of capital in the region, and therefore also good for global trade.