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The Impact Of Trade War On China's Financial Stability Can Be Controlled
Kinghood International Logistics Inc | Updated: Aug 08, 2018

    1, the United States to 50 billion U.S. dollars of Chinese products levied 25% tariffs on China's exports and economic impact is not

  In the event that the two sides have already conducted high-level economic and trade negotiations and issued a joint statement, Mr Trump's sudden change of mind may have been due to the fact that the White House team's opinion had been inconsistent, and now that the Hawks ' voices were louder, Mnu's assertion that the so-called moratorium on trade (on hold) had changed. According to estimates, if the United States imposes 25% and 10% tariffs on China's steel and aluminium, and enforces a tariff sanction of 301 investigations, it imposes a 25% tariff on 50 billion U.S. dollars in Chinese products. China has taken counter measures to impose a 15% tariff on 120 imported goods such as fruit and products, a 25% tariff on 8 imported goods such as pork and products, and a 50 billion per cent tariff on US goods of 25% dollars. Under such circumstances, U.S. tariff sanctions have little impact on China's exports and the economy.

  It is estimated that short-term drag on China's economic growth of about 0.1%. In the worse case, if the Sino-US trade war were to escalate, tariffs on each other or other measures, it would eventually reduce China's foreign trade surplus to the US by 100 billion dollars. The United States to strengthen exports of Chinese technology products and China's scientific and technological investment in the United States. In this case, the estimated impact on China's GDP growth rate reduced by 0.8%.

  Still, China's growth rate can remain at around 6%.

  It should be noted, however, that if trade conflicts escalate, it is difficult for China to obtain foreign direct investment (FDI) or to import high-technology products, which may have a greater impact on the Chinese economy.

  2, the impact of trade shocks on China's financial stability can be controlled Trade conflicts on China's financial stability should be said to have a certain impact, but not so big.

  Because in the trade conflict, first of all, China's export growth rate will be affected, the growth rate of foreign exchange reserves will be affected, from this point of view, the RMB exchange rate will be passively a certain devaluation pressure, which may affect China's financial stability to some extent. But we see that China's reserves are still relatively large, and China exports to the United States accounted for 20%, not the entire world export market only the United States, China can to other countries such as Europe and emerging markets to increase exports. And after China's exports to the United States fall, China's imports of some intermediate products will also fall, so the impact on the entire foreign trade surplus will not be as large as the number of exports.

  The outside world may be too sensitive to this influence, and in fact it is not as big as people think.

  3. China's established reform policy cannot be disrupted by trade war The United States unilaterally take such unilateral measures, put in any one country will give a certain response, such as Mexico, Canada respond to the corresponding, the EU also responded, not to mention China. China is a very large trading partner of the United States, so it is natural and necessary to make a certain reaction. Short-term China can make a certain counterattack.

  But in the medium and long term, China itself already has the direction and steps of reform, not to be disrupted by trade wars.

  China still needs further reform and opening-up, including the opening of the service sector, and it may also need to negotiate further with the US to find better solutions to avoid escalating trade conflicts, which are not good for both sides and the global economy.

  4. China should join hands with other countries to safeguard global free trade and multilateral system The Trump government first withdrew from the TPP after taking office, then talked about NAFTA again, expressed dissatisfaction with the multilateral trading system and recently threatened to withdraw from the WTO. I don't think that's going to do us any good because the WTO, which includes the former GATT, was built on the initiative of the United States, which has benefited a lot over the decades.

  This unilateral move by the United States is, in effect, a disrespect and a violation of the global trading system. China should uphold this global free trade and multilateral system, and join hands with other countries to defend the system. It can be assumed that if all countries are trampling on WTO rules in their own unilateral interests, such as national security, there will be no rules for international trade as a whole.


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