As Trump tariffs continue to spread, an ideological war of words is redressing harsh protectionist realities. What is the state of Chinese growth amid the US tariffs? And what is the impact of the trade wars on global economic prospects?
Recently, US academic Yasheng Huang argued on Wall Street Journal that “Jack Ma is retiring. Is China’s economy losing steam?” By the same logic, Elon Musk’s forced resignation from Tesla would mean US slowdown.
Similarly, Bloomberg columnist Nisha Gopalan explains Ma’s retirement by claiming that the prosecution of corrupt business oligarchs in China signals economic weakness, despite corruption’s corrosive impact on private economy. In turn, Gordon F. Chang urges US tariffs against all Chinese imports as “necessary.” But these prophecies have a pathetic track record. In 2001, Chang published The Coming Collapse of China, even as Chinese economy was about to grow sixfold in a decade.
It is often said that the first casualty of war is truth. Trade war is no different. What is odd is not that times of peril offer opportunities to ideologists, or ideologies to opportunists. What’s odd is that, despite recurrent flawed predictions or prejudiced bias, partisan oracles continue to be given ample space in major global media.
Setting aside the hollow prophecies, where is Chinese economy today?
Chinese growth amid Trump’s trade wars
As the People’s Bank of China (PBOC) recently cut banks’ reserve requirements, Reuters headlined: “Trade war imperils [China’s] growth.” Yet, analysts saw the cut as an affirmation of the Chinese government’s commitment to support the domestic economy. In the new, more challenging status quo, accommodative monetary policy is likely to continue, along with further fiscal easing.
In the short-term, China is responding and adjusting to US tariff wars. In 2018, growth forecast is 6.5% to 6.6%, thanks to strong first half of the year. Moderation in the second half will reflect US tariff wars and consequent slower demand growth.
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