ASSESSMENTS

U.S. Tariffs Put China's Economy to a New Test

Jun 5, 2018 | 09:00 GMT

Workers at Chinese e-commerce giant Alibaba prepare for a sales onslaught coinciding with 'Singles Day,' billed as the world's largest one-day online shopping festival.

Workers at Chinese e-commerce giant Alibaba prepare for the online shopping extravaganza known as 'Singles Day.' Domestic consumption has become a significant part of the Chinese economy, helping to buffer it somewhat from U.S. tariffs.

(STR/AFP/Getty Images)

Highlights

Significant U.S. tariffs on trade goods and restrictions on tech investment will complicate China's ongoing economic rebalancing process.
High national debt levels will constrain Beijing's ability to pump investment funds into the economy in the case of a significant trade blow, which will affect companies and industries that rely on U.S. markets and are already operating on thin profit margins.
The acute pressure China is facing is only going to harden Beijing's resolve to rapidly develop self-sufficiency in sensitive technological supply chains.

A decade after the global financial crisis, China is continuing efforts to develop a more sustainable model for economic growth. And now, it's facing a new challenge in the form of massive U.S. tariffs and investment restrictions. But the lessons China has learned over the past decade will come in handy in its current efforts, and the government in Beijing may be able to manage the Chinese economy better than it did in 2008. ...

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