China holds cards in US tariff stand-off

If Donald Trump wants to seek an agreement from its administration, the United States and China have stopped a dangerous trade with the two largest economy business in the world with the world’s two largest economy businesses.

China depends in the United States as an irreversible market for its produced products, but experts warned that Washington’s ability should not be reduced to the power of Beijing to prevent Trump’s compulsory strategies.

The combination of centralized political control, the growing export market and some strategically important materials, including rare earth metal, give its virtual stroland, Beijing’s power to discuss a lot of discussion. The question is how far it can use to lift it without any more harm.

Trade power

Last year, China had about $ 300 billion trade surplus in the United States, about 15 percent of its total exports were moving to the United States. Trump’s tariff Beijing will have significant pain in 145 percent.

But international economists say that it ignores an important fact: China can easily replace its imports more easily than other means.

The export of US products to China is concentrated in large quantities of agriculture-such as soybean, cotton, beef and poultry-chicken-and so low-value addition. Many US imports from China – electronics, equipment and some processed minerals – the opposite.

Professor Marta Begowoa, a professor at the Department of International Economics in New York, says that when the United States and China were heavily dependent on trade, the final balance of risk was the US party.

“The US dependence on China is high, because China can easily source agricultural products from anywhere else than the electronics and equipment replacement in the United States,” he said. “Beijing has already bought Soyabian from Brazil, for example, so in the end, China has some more profit”.

The Depreciation of the dollar Importing goods in the United States has made it more expensive.

The pain of a trade war will still be felt in China, which imports high-end products from the United States, including aircraft, pharmaceuticals and semiconductor-Washington has tried to limit access to chips in recent years. Many American businesses are embedded in the land supply chains in the land of the country.

Goldman Shutch analysts assumed that 10 MN -20 MN workers in China could come in contact with export to the United States. They wrote last week, “The combination of extremely high US tariffs, acute exports to the United States and a slow global economy is expected to put enough pressure in the Chinese economy and the labor market,” they wrote last week.

Strategic ‘backdoor’

Since Washington has imposed departmental tariffs on steel, aluminum, solar panels and washing machines in the first term of Trump, China has tried to reduce its dependence on US customers’ export. According to the US government data, according to the US government data reduced by Beijing’s trade exposure, the US import part of the US imports stood from 20 percent to 8.5 percent in 2016.

At the same time, Chinese manufacturing capacity has been re-built through Southeast Asian countries like Vietnam and Cambodia, where Chinese manufacturers took advantage of cheap labor and reduced contact with US tariffs. Exports in Vietnam increased 17 percent in March, Data published this week Show

The “back door” closed for Chinese export is still seen how much determined is the scene of Trump. Vietnam, which Now a 124 billion dollar trades run the surplus In the United States, a “mutual” 46 percent tariff has been threatened – though it was postponed for 90 days.

French Investment Bank is the chief economist in Asia-Pacific of Natixis and senior fellow at Broogel Think-Tank Aliceia Garcia Herro, saying break has provided some breathing space. “Basically it gives both sides a 90 -day vacation so to get out of things.”

However, even though Chinese export stiffness was blocked, Garcia Herro said that its impact on China’s broad economy would not be catastrophic. GDP of the country increased by 5 percent last year in the last year Near-$ 1TN Global Trade SurplusThe

“China is a violent economy that is elastic,” he said.

However, analysts also warned that the Chinese EU, India and countries around the world could invite blockback to the alternative markets, including the additional power to the alternative market.

Alex Capri, a senior lecturer at the Business School of the National University of Singapore, said, “I will expect other countries to respond to potential devastation,” said Alex Capri, a senior lecturer in Business School in Singapore.

Financial holdings

Enjoys more lifting from China Vulgar It has been deposited, which it can sell theoretically to reduce its exposure. As a result, US assets can raise concerns and reduce the dollar value and the US government’s debt price further.

Zerlina Jeng, head of Asia Credit Strategy on Creditite, mentions that the amount of sales in the treasury will also hit China, due to its size of its holdings.

“It said, we hope China will continue to diversify its US-dinaminated reserves to diversify other currencies,” he said.

Critical mineral

Many rare earth metals needed for modern production in the United States are dependent on China for electric cars batteries. Beijing controls more than two-thirds of global rare earth production and more than 90 percent of the processing capacity-an important issue of liverity.

Trump eliminated critical minerals of his first “mutual” duty in recognition of US weakness. However, this type of waiver may not be enough to avoid the supply crunch if China is excavated.

China Set up export control Last week, seven more rare earth materials, including dysprosium and terbium, which are essential ingredients in products such as jet engines and EVS.

Democratic

Although China’s ruling Communist Party does not have the opinion of the people, it is less responsive to pressure than the White House, which has already been forced to respond to unrest in bonds and stock markets and threatens high prices.

Alfredo Montufar-Hellu, head of the China Center at the New York Conference Board, mentions that Beijing-fought against his own challenge-a greater power to encourage his economy in a recession was entering the stand-off.

It has more liver for its domestic market to manipulate, which Chinese authorities see as an indicator of social stability and economic sentiment. Beijing has intervened a lot in the market in recent weeks, The “national party” of the state organization Integrated steps in driving to support share prices.

However, the Chinese government is also extremely sensitive to show public dissatisfaction. By the end of 2022, it lifted his three -year Covid -19 restrictions shortly after the protests were published in large cities.

“From the market response, I will tell the United States at the moment [is hurting more]”The Chinese economist of the capital economy has added Julian Evans-Prechard.” There is more pressure to come to the table in the USA to try to discuss. “

But the first tremor of a trade war – such as delayed ride from the huge ports of China – there is Still to eat exposed dissatisfaction In the provinces of the southern production of China.

A foreign manufacturer in Guangdong province said, “I did not meet a single person, even manufacturers were directly influenced by the tariff, who blamed Beijing,” said a foreign manufacturer in Guangdong province. “The mood I saw is RejectionThe I think the way the government is playing it is about national pride now. “

Additional Report of Chan Him-Him in Hong Kong; Alan Smith’s data visualization in London