What are China's growth prospects in an all-out trade war?
In such a worst-case scenario, Beijing can look to regional markets to offset the fall in exports to the US.
Add BT as a preferred sourceTHE US announced on Sept 17 new tariffs on US$200 billion of imports from China, starting with an initial rate of 10 per cent on Sept 24 and rising to 25 per cent in January 2019. The move came two months after the implementation of the 25 per cent tariffs on US$50 billion of imports from China. President Donald Trump also threatened to impose more tariffs on another US$267 billion of Chinese exports to the US if Beijing retaliates. That would put all Chinese exports to the US under punitive tariffs.
In the worst-case scenario of a full-scale trade war, where the US levies hefty (say 25 per cent) tariffs on all Chinese exports to the US and China retaliates, how bad would it be for China's growth?
The Chinese stock market seems to be pricing in an economic hard landing since June 2018 when the trade war fears intensified. But what do economic theory and evidence tell us?
Copyright SPH Media. All rights reserved.
