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Trump’s Win Drives China’s Expected Stimulus Response Amid Potential Tariffs
Following Donald Trump’s 2024 victory and his renewed tariff threats, expectations are high for China to deploy more fiscal stimulus, likely to be announced on Friday. Trump has proposed tariffs of up to 60% on Chinese goods, a steep hike from his initial 10% tariffs, which China weathered while still seeing the U.S. as a key trade partner.
Economic Impact on China:
Potential Tariff Drag: If tariffs rise to 60%, China’s GDP could shrink by 1%, cutting exports by up to $200 billion, according to economist Zhu Baoliang.
Expected Stimulus: Analysts forecast a 10 trillion yuan ($1.39 billion) package, with funds for local debt relief and real estate support.
Expected Stimulus: Analysts forecast a 10 trillion yuan ($1.39 billion) package, with funds for local debt relief and real estate support.
Stock Market Reactions:
Chinese stocks have slipped, anticipating tougher trade conditions, while U.S. stocks surged on expectations for more favorable domestic policies.
Strategic Shifts:
Tech Self-Reliance: With restricted access to U.S. tech under Trump’s past policies, China has increased investments in domestic manufacturing and tech innovation.
Broader Trade Dynamics:
China has pivoted trade relationships, with ASEAN now accounting for 25% of its exports, compensating for decreased U.S. share.
With possible Congressional Republican support, Trump’s trade stance could tighten further, pressing China to reinforce its export markets and stimulate its economy in a more challenging global landscape.
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74724029 : China already has a tariff contingency plan, while the usa entering a rate-cutting cycle may cause inflation from tariffs, it's hard to say who will suffer first.