Temporary trade-war truce might be too late for China

published 20 December 2018

927_MW_P06_Markets_Bottom — Chinese exports have proved resilient

The ceasefire in the tradewar may come too late for China, says Natalie Lung on Bloomberg. Last week the US pledged to postpone a 15% increase in the tariff rate on $200bn of imports from China; in return China has suspended tariffs on US cars and carparts for three months.But according to Citigroup, the hiatus is not enough to iron out deep-seated differences between the two countries over intellectual property, cybertheft and state support for Chinese companies. So the hostilities are likely to resume, almost halving China's export growth to 5.1% in 2019.

Not so fast, says Christopher Beddor on Breakingviews. Exports to the US have been surprisingly resilient so far. They grew by 10% last month. Many ascribe that to "front-loading" US firms stocking up in advance of tariffs. Note, though, that according to Credit Suisse, orders from European importers, who wouldn't need to front-load, have "not significantly deviated" from American customers. Nor can they discern a difference in demand between US customers who would be affected by tariffs and those who wouldn't. Perhaps demand for Chinese exports is more robust than many fear.

It doesn't really matter that much either way, according to Capital Economics. Say the postponed US tariffs do climb to 25%. This would only cut Chinese GDP by about 0.3%."The impact on America would also be minimal."Trade spats are bad news for intermediate suppliers, of course. Taiwan is especially exposed in this regard.But it still isn't that big a deal.It would probably reduce the island's GDP by 0.8%, while intermediate goods comprise about 0.5% of emerging Asia's. For now, at least, too much fuss is being made about the trade war. Investors in Asia should be keeping an eye on global growth instead.

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Marina Gerner is an award-winning journalist and columnist who has written for the Financial Times, the Times Literary Supplement, the Economist, The Guardian and Standpoint magazine in the UK; the New York Observer in the US; and die Bild and Frankfurter Rundschau in Germany.

Marina is also an adjunct professor at the NYU Stern School of Business at their London campus, and has a PhD from the London School of Economics.

Her first book, The Vagina Business, deals with the potential of “femtech” to transform women’s lives, and will be published by Icon Books in September 2024.

Marina is trilingual and lives in London.

Temporary trade-war truce might be too late for China

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