GDP the next year would look like 96.5*1.07=103.255 , so 3.255%growth, if US exports disappear and all the rest keep on climbing 7%
I suspect cutting all exports to the US would create quite a mess.
Trump Is Right to Battle China on Trade, But Now Comes the Hard Part
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GDP the next year would look like 96.5*1.07=103.255 , so 3.255%growth, if US exports disappear and all the rest keep on climbing 7%
I suspect cutting all exports to the US would create quite a mess.
This is correct, but this doesn't take into effect substitution effect. They can shift some of the exports to other countries. Exports to EU and Brazil is already rising. Some of the relationship are permanently altered because of the trade war. They can consume some of it locally and inject some government money like US is already promising for farmers here.
Another consideration is the massive liquidity stimulus that the Chinese apparatchik has been pumping into their economy since Q4 2018. Look at the March and April 2019 China Retail Sales and GDP numbers.
Many complain about the US - but the EU will be quite proactive and protectionist.
Substitution effect takes time to play out.
I think the biggest factor is psychological, the fear factor tends to reduce the propensity to spend and so the slow down of their domestic economy will accelerate the downturn rapidly. that is perhaps why the government abruptly started a stimulus program last year while in the middle of tightening credit. But again QE takes time to play out too.
LOL we have had a, to use a (tRumpian phrase), yuuuuuuge trade deficit ....... for decades AS WELL a declining manufacturing base ...... for decades. Not just since 2001 duuuuuuuuuh.
Populist TV shill guy played it up (among many red meat topics) and defeated a washed up former President's lesbian wife.
But the more things change, the more things stay the same. He ain't going to do chit about it.
Populist TV shill guy played it up (among many red meat topics) and defeated a washed up former President's lesbian wife.
But the more things change, the more things stay the same. He ain't going to do chit about it.
+ 1
As well China can shift some of its manufacturing elsewhere to get around some of the tariffs.
The problem: You then shift jobs away to other countries, exactly the opposite of what Xi wants, to create jobs at home. China's social safety net is non existence, to keep people from rebelling they need to have jobs.
It is not so simple.
Most of that GDP are imported components from places like Europe, Japan, S. Korea or even US. China just adds labor cost to the supply chain, which is little. If all the components are produced in China, it would have been true. But it is not. China would just import much less. That will add back to China's GDP.
In total, next year, at worst, it will decrease 1% from China GDP growth. China easily make that up by expanding and developing other domestic industries like airplane, computer or software. Import much less airplanes or chips and computing stuff from other places.
However, I can't say it for Europe and other places. Their GDP will be decimated when China stop importing.
It looks like the number of manufacturing jobs in the U.S. was pretty consistent between the mid 60's and the year 2000. Outside of a few spikes in the 70's, we stayed pretty consistently between 17 & 18 million jobs. Then China joined the WTO in 2001, and we saw a drastic decline. It isn't a coincidence that the trade deficit exploded after that. We had a trade deficit of about $80 billion back in 2000. Now it's over $500 billion.
