Jakub Porzycki | Norfuto Gety pictures
The imminent American definitions of the Chinese economy are likely to deal already, which enhances calls for more powerful measures to support the country's growth.
On Saturday, US President Donald Trump followed a threat after his presidential victory, and imposed 10 % on Chinese commodities, starting from Tuesday, on the alleged failure of Beijing to prevent the flow of fentanel to the United States
A 10 % blanket tariff will be imposed on top Current definitions Up to 25 % Trump was imposed on Chinese goods during his first presidency.
The economists in Goldman Sachs said in a report on Monday that the additional definitions by 10 % will reduce the growth of real GDP in China by 50 basis points this year.
The Investment Bank expects that the real GDP growth in China will slow down to 4.5 % this year while local price growth remains under pressure due to poor demand, with consumer inflation expected to rise by only 0.4 % in 2025. Consumer prices barely inflated last year, 0.2 % on an annual basis. High American tariffs can increase pressure on local prices while weakening the external demand for Chinese goods.
When Trump began his second term, he ordered his administration to investigate Beijing's compliance with a commercial agreement that highlighted him during his first presidency in 2020. The final result of the evaluation will be delivered to Trump by April 1. Economists said.
“It is clear that 10 % of the customs tariffs came quickly and less, but there is still a lot of uncertainty about the timing and size of additional definitions in China,” Wang Tao, UBS Investment Bank told CNBC on Monday.
She said: “We are not reviewing the 2025 foundation forecast of the GDP growth by 4.0 % in China,” as it achieved a 60 % additional American tariff on a quarter of China's exports and greater political support than Beijing.
Defending the currency
The Chinese Yuan fell 0.60 % to 7.3631 against Greenback in maritime trading on Monday, before trim the losses, according to LSEG data. The yuan has lost 3.7 % since Trump's presidential victory in early November.
The markets were closed on the main mainland of China for the new lunar year and will resume trading on Wednesday.
The initial tool used by the Popular Currency Management Bank was the daily reference rate – the wild canal is allowed to trade only in the range of 2 % of this reference rate.
Deng Xuang, chief economist in Greater China and North Asia at Standard Charterd, said the immediate level as PBOC determines the reference rate on Wednesday is a major indication of measuring Beijing's reaction to the high tariff.
“We expect China to rely mainly on motivation to enhance local demand, instead of reducing the value of the large currency, on compensating for the effect of customs tariffs,” Shuang added.
Since last year, the central bank has limited the exchange rate instructions to less than $ 7.20 per dollar, a step seen as a sign of its determination to defend the currency.
With the high customs tariff rate, the Central Bank can allow a “gradual tree with a higher” wild yuan between 7.40 and 7.50 against the US dollar, and Goldman Sachs said, expected to set PBOC priorities FX stability before reducing monetary policy.
The Central Bank can “skip” other reduction measures such as lowering the money amount that banks must keep as reserves, while seeking to manage liquidity through the opposite re -purchases in the open market, according to Goldman Sachs.
Eyes stimulation
Barclays said in a memorandum on Monday that China was able to “overcome” the huge definitions effectively during the first period of Trump, but it is extremely easy to escape from the impact of definitions this time.
The bank said that the policy rooms in which the decrease in the rate of maneuvering, the transfer of trade is widely decreased, and the reduction of exporters ’profit margins” has shrunk significantly. “
Since an external commercial war waved on the horizon, economists expect more financial spending to compensate for the pressure of China and the strengthening of consumer spending.
While the economy reached the goal of 5.0 % growth in the past year, it has struggled to get out of a real estate collapse and weak consumer and business confidence, leaving exports as a major growth engine. Even in 2023, Exports contributed approximately 20 % of the country's gross domestic productAccording to the World Bank data.
TIT-FOR-TAT
Chinese Ministry of Commerce On Sunday, he said that he would challenge Trump's introductory decision In the World Trade Organization, it condemns overwhelming definitions as a “serious violation of international trade rules.”
While pledging to “take counter -measures to protect its rights and interests firmly,” China's statement stopped announcing any specific plans for definitions.
The file of a lawsuit with the World Trade Organization was largely a symbolic step taken by Beijing against the definitions of Chinese electric cars by the European Union as well. In recent weeks, Chinese officials have repeated that Beijing believes There is no winner in a commercial war.
Lin Song, chief economist in liquefied natural gas, said that Beijing's response has so far appeared “moderate to start.” .
“If it is pushed to an angle, China may be stronger than most of them expect,” Song added, indicating that Beijing has a set of tools to respond, including intensifying export controls or ban on rare land, and measures targeted by American blocs with great accreditation In the Chinese market.
Trump's executive orders on Saturday included an additional 25 % tariff on the goods of Mexico, one of the main re -export channels in China.
A song added that China may push China to convert exports to the countries of ASEAN and Latin America, while strengthening trade relations with these countries to help compensate for a “more protection group for us.”
