China is a key driver of the global economy and a growth slowdown is a major concern for investors around the world.
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Economists assume that the government’s structural reforms, including efforts to cool China’s overheated housing market, coupled with a potentially testy relationship with the new U.S. administration will weigh on China’s growth this year.
Not only would a clash derail bilateral ties, it might also deep-six a nascent global recovery.
The full-year expansion in 2017 will edge lower to 6.4 percent, Bloomberg economist surveys show, while the International Monetary Fund has raised its forecast to 6.5 percent. Here’re the countries with largest trade deficit with the United States – China (trade deficit of US$367 billion in 2015) follows by European Union, Japan, Mexico and South Korea.
China’s economy grew at its slowest rate, 6.7 per cent in over a quarter-century and with president-elect Donald J Trump to be sworn in today, a trade stand-off, between Beijing and Washington can not be ruled out.
“The two sides should try their best to be friends and partners, not adversaries and enemies”, Ministry of Foreign Affairs spokeswoman Hua Chunying said before Trump took office. “It will be interesting to watch how China reacts to this”.
The stakes are high. Yet despite the solid headline figures, there are fears that deteriorating trade ties with the USA will undermine exports from the world’s biggest trading nation.
China, the world’s top goods exporter, is heavily dependent on free trade and would be hit hard by a new wave of protectionism and a broader backlash against globalisation. Between 2006 and 2014, they climbed more than 300 percent.
Data Friday from Beijing underscored that shift. Consumption contributed 64.6 per cent to growth a year ago. But he was “very, very concerned” about China’s own growing semiconductor sector.
“On the world stage, Trump will likely align his foreign policy with USA corporate interests, blurring the lines of ideology or political values”.
Editors of media outlets were instructed to keep coverage of the presidential inauguration in line with the “unified message from centrally controlled media” and through the state-run Xinhua News Agency. He has accused China of currency manipulation.
Steven Mnuchin, nominated for Treasury secretary, has made few declarations on trade.
Business executives seem sanguine, for now.
“The new USA government should realize that it’s normal for these two great countries to have problems and disagreements”.
Still, Trump has proven anything but predictable. -China trade war is equally damaging.
The stronger United States dollar has spurred capital outflows from China, forcing Beijing to use its foreign currency reserves – which have fallen by about $US1 trillion ($1.3 trillion) from their peak to just over $US3 trillion – to prop up the currency. It was also the slowest since 1990, when the economy grew only 3.9 per cent as a result of global sanctions following the 1989 Tiananmen crackdown.
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“A trade war between China and the USA seems inevitable”, Pang Zhongying, of Renmin University, told the South China Morning Post. “It is, indeed, a decision that President Trump has to be extremely careful about”.
