China's announcement of a record trade surplus with the US ahead of Donald Trump's inauguration reignites trade tensions. The $992.2 billion surplus, coupled with a surge in December exports, fuels concerns about Trump's potential to impose tariffs on Chinese goods. The article analyzes the factors contributing to China's surplus, including overcapacity in certain industries and weak domestic demand, and explores the potential consequences of a new trade war for both countries.
China’s announcement of a record trade surplus on Monday, a week ahead of Donald Trump’s inauguration, is inadvertently, but unavoidably, provocative.to impose tariffs of up to 60 per cent on China’s exports to the US on “Day One” of his second term as president, the $US992.2 billion surplus will be like a red rag to a bull.More particularly, while the growth in exports to the US of 4.9 per cent in 2024 might be relatively modest, a 15.
To date, starting more seriously in the latter months of last year, the efforts have been focused on the trade-in policy, with the range of products and sectors targeted continually being expanded. The prospect of China falling into deflationary trap – the “Japanification” of its economy – has led to calls from economists outside China to do a lot more to boost consumption. That may well happen at the National People’s Congress in March, where the country’s most senior leaders will set out their economic objectives and strategies for this year.
China would look to increase its citizens’ income, increase subsidies for consumers and improve social security, he said. The most obvious and least wasteful measures that might lift consumption would be to target low-income households by expanding and strengthening the social security system. The impact of that trade war, if Trump follows through with his threat, could be even worse if China responds by diverting its exports to other countries.
If the US does build the promised wall against Chinese imports and China redirects its increased surplus industrial capacity to other markets, it is almost inevitable that those economies will move to protect their domestic industries and jobs, exacerbating the impact of the trade war on China.
TRADE WAR CHINA ECONOMIC SURPLUS TARIFFS DOMESTIC DEMAND
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