What is the impact of the U.S.-China trade war on the U.S., China and the global economy

The U.S.-China trade war, if it occurs, will have a direct negative impact on China's economic growth and labor market stability in the short term. Some analysts believe that if a trade war does break out between the U.S. and China, it may cause a huge demand-side impact on China in the short term. A slowdown in economic growth and an increase in unemployment might force policy to be more reactive, and would also add to the pressure for a greater depreciation of the yuan. And a more pessimistic scenario is that the increased pressure to stabilize growth has forced the government to introduce further easing measures, missing the opportunity for structural reform.

First, in 2016, China's merchandise exports to the United States accounted for 18 percent of China's total merchandise exports and 4.4 percent of GDP. Commodity exports to the U.S. are not only concentrated in traditional labor-intensive industries, such as toys, furniture, textile exports to the U.S. accounted for about one-third of all exports in this industry, and with the upgrading of China's manufacturing industry, exports to the U.S. of capital-intensive industries such as electronics and machinery have also increased significantly, with exports catching up with labor-intensive industries.

Secondly, China's dependence on the United States in technology imports and financing. For example, many high-tech products imported by China, the key technology is only held by the U.S. Once the U.S. stops the export of such core technology to China, it may have an impact on China's industrial supply chain. For example, Intel and AMD are very popular in the use of personal computer CPUs, and the vast majority of China's cell phones are also installed with GPS, once the trade war breaks out, it will take some time for China to find a replacement for such technology.

Third, direct investment, the past ten years of U.S. direct investment in China accounted for all of China's FDI of 3.3%, ten years of U.S. companies in China employing more than 1 million people, China's main export commodities in other major exporting countries accounted for the proportion has been quite high, and to further increase the proportion of exports and the market share of the space is extremely limited last, it is estimated that it would be difficult to find a market for the United States. Alternative markets.

But there are also views that trade friction on the Chinese economy in the medium and long term impact is relatively limited. First of all, the long-term impact of trade friction on the economy is less than the short-term impact on the financial markets; secondly, there is a "big and can not fall" interdependence between China and the United States, the trade friction will not get out of control, the two countries will eventually converge in the game of two-way compromise, the new era will not have a "new Cold War "Third, China will adhere to the "I am the main" coping strategy, short-term countermeasures and long-term strength of the complementary strength have ample policy space. Fourth, China's exports to the United States accounted for 19% of China's total exports to the world, China's exports to the "Belt and Road" related countries accounted for about 40% of China's exports, China is the global trade in intermediate products exporters, which means that even if the United States unilaterally imposed tariffs on China, China can be through the increase in trade cooperation with other countries to hedge.