Since the first trade war in 2018, the country’s exports to America have dropped from 19 to 15 per cent as Chinese manufacturers diversified to other markets. Nonetheless, a whopping $US439 billion ($708 billion) of Chinese-made goods landed in the US last year, a great slab of this being electronics.
American consumers are in for a shock when they go to buy their next iPhone. About 73 per cent of all smartphones, 78 per cent of laptops and 87 per cent of video-game consoles come from China.
The impact on Chinese exporters will be brutal as they scramble to find new markets. Chinese leaders are facing the real possibility of “millions of people becoming unemployed” in a wave of bankruptcy, China expert Victor Shih told CNN, at a time when the country’s economy is already floundering.
It is now a question of when – not if – Beijing will unveil a new stimulus package to fire up confidence and get Chinese consumers spending so they can absorb some of the demand lost to the US export market. Top officials reportedly held ad-hoc meetings this week to thrash out a plan to boost the economy through support measures for housing and consumer spending.
Many analysts have late April pencilled into their calendars as a key opportunity for various state organs to rubber-stamp a strategy, coinciding with meetings of the Politburo and national legislature’s standing committee.
Demand for the $US144 billion of US imports in China will also dry up. An 84 per cent tariff will deliver a sucker punch to Trump’s rust belt base. American farmers send most of their soybeans and cotton to China.
As the Trump team begins negotiations with a dozen countries after pausing tariffs for 90 days, Beijing has embarked on a charm offensive to recruit its trading partners to a unified block of resistance against America’s coercion.
Xi will spend next week touring South-East Asia, holding bilateral meetings with Cambodia, Vietnam and Malaysia, which are facing crippling duties of between 24 and 49 per cent, unless they secure a deal with Trump.
Beijing’s overtures to Australia – delivered by Chinese ambassador Xiao Qian’s appeal for the two countries to “join hands” – landed flat.
“We are not going to be holding hands with China in respect of any contest that is going on in the world,” Deputy Prime Minister Richard Marles said.
Ultimately, Xi holds cards that Trump does not. He has the full resources of the autocratic system he leads – a compliant media, a heavily censored internet and a sophisticated apparatus of state supervision to crush dissent, and no immediate political rivals.
“Even though China understands it will pay a much higher economic cost in percentage terms, the international political economy calculations mean that they are likely to stick to their guns,” Cornell University professor Wendong Zhang says.
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