The increased likelihood that Donald Trump will regain the US presidency is a threat to Xi Jinping’s factory-led strategy for restructuring China’s economy.
When the senior leadership of China’s Communist Party gathered in Beijing for their five-yearly “third plenum” this week, they would have been monitoring recent developments in the US with some concern.
Trump’s transactional view of trade and his misunderstanding of how tariffs work means the threat of a 60 per cent tariff wall against imports from China is becoming ever more real.UBS economists released a report this week that says they estimate it would carve 2.5 percentage points off China’s GDP growth rate, effectively halving it from its current rate of around 5 per cent.
Data released by China’s National Bureau of Statistics at the start of the week shows real estate investment fell another 10.6 per cent in the June half-year , with new construction starts down 23.7 per cent.
If action by the US were to divert China’s exports into other markets, the EU would be the most obvious target and would be under pressure from its domestic manufacturers to respond with even more trade barriers.
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