Chinese economy called invulnerable to trade war

[TaiShang]

Chinese economy called invulnerable to trade war
China Daily, January 3, 2017

A worker looks closely as containers are unloaded in Qingdao Port, Shandong province. [Photo/China Daily]


Anyone fancying a trade war with China might have missed their best opportunity, according to trade officials and economic advisers, who said the Chinese economy has already passed the stage of being vulnerable to such actions.

They said trade is no longer a main factor contributing to the nation's GDP growth, and the country has made preparations in the past few years for taking on the challenge of a possible rise in protectionism.

They also said that trade was not among the key tasks assigned by the just-completed Central Economic Work Conference, a yearly top-level decision-making meeting to map out the development strategy for the coming year.

In the conference's communique, only the quality of import and export goods was briefly mentioned.


More than ever, China is relying on its own reform and stability for building its economic strength, they said.

Nonetheless, Li Guanghui, vice-president of the Chinese Academy of International Trade and Economic Cooperation affiliated with the Ministry of Commerce, said that this year, "protectionism will continue to rise and trade frictions will become more violent".

One of the worst trade frictions, he said, could occur between China and the United States, since president-elect Donald Trump has said he will impose punitive tariffs on imports from China.

Zhang Yansheng, chief economist of the China Center for International Economic Exchanges, a think tank close to the government, said that the expected rise in the US inflation level this year would weaken US exports and stimulate imports, resulting in a growing trade deficit and an eagerness by Washington to make China a scapegoat.

Should that happen, "China must handle it well", Zhang said, adding that China has no shortage of available countermeasures.

China's confidence in facing protectionism by the US lies in the reform it recently has made. Its growth is no longer export-driven but led primarily by domestic consumption, which accounted for 66.4 percent of its GDP growth in 2015, according to Ministry of Commerce data.

"China has reduced its reliance on exports for growth to a great extent, thanks to its prompt shift to domestic demand when global market demand was no longer in high growth in the last few years," said Zhang.

At the same time, the country is improving industrial quality and sharpening its competitive edge in the global market, he noted.

Yu Jianlong, secretary-general of the China Chamber of International Commerce, said Trump is unlikely to have a major impact on China-US trade, much less on China's overall strength.

The US has taken repeated protectionist measures against China in the past 15 years, he said, but bilateral trade has "by and large" fared well－thanks to the long value chain of Chinese industry and the capability of the world's second-largest economy to provide for the various needs of the US market.

Even the US' failure to recognize China's market-economy status will not be able to derail China-US trade, Yu said.

Trade volume between the world's two largest economies has increased rapidly, growing from about $70 billion 20 years ago to nearly $600 billion in 2015.

According to the World Trade Organization, China's merchandise exports amounted to almost $2.3 trillion in 2015, despite a 3 percent dip from the previous year.

If Trump, who takes office on Jan 20, imposes a 45 percent tariff on Chinese goods and reduces China's exports to the US by half, it is unlikely to affect the nation's highly diversified global trade income picture, a HSBC report said in November.

More than 60 percent of China's exports are currently directed to markets other than the US, Japan and the eurozone, the report said.

 

[shjliu]

if the US imposes 45% tariff on Chinese goods, then everything in the USA will have a price hike, it will cancel out the wage increase. China may pick on all the stuff export to China from the USA. let's see what happen.

 

[majorytyrant]

"Let her sleep, for when she wakes she will shake the World" - Napoleon

 

[Nan Yang]

Further more majority of China export products are daily necessary and not really available elsewhere.
Countries that will be affected by trade war would be countries like Japan and Korea that makes higher value items like cars and trucks and which are available elsewhere.

 

[TaiShang]

Further more majority of China export products are daily necessary and not really available elsewhere.
Countries that will be affected by trade war would be countries like Japan and Korea that makes higher value items like cars and trucks and which are available elsewhere.

I think China was very smart to diversify export destinations, promote domestic consumption and reduce the share of export to GDP, and establish a complete manufacturing chain which makes the country indispensable in many export categories.

It is not only that US share in China's total trade is declining steadily. Export's share in China's GDP is declining, as well. Hence, the US is not positioned well to really hurt China by putting up higher tariffs. In the end, they may end up suffering even more.

I think China is fully ready to any protectionist-hostile trade measures by the US, and potentially, the EU.

 

[Nan Yang]

Last year, during the double big meeting, they already discussed future market will be in central Asia, SEA, Africa and Latin America etc as US and Europe market are already saturated.

China is already one step ahead.

 

[cirr]

Tilting, tilting, abandon ship, abandon ship.

Jan 03, 2017, 08.12 AM | Source: Reuters

China Dec factory activity rises to near 4-year high: Caixin PMI

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) rose to 51.9 on a seasonally adjusted basis, from 50.9 in November and easily beating analysts' forecasts of 50.7.

China's factory activity picked up more than expected in December as demand accelerated, with output reaching a near six-year high, a private business survey showed on Tuesday, giving the manufacturing sector a solid boost heading into 2017.

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) rose to 51.9 on a seasonally adjusted basis, from 50.9 in November and easily beating analysts' forecasts of 50.7.

The index has been slowly building momentum thanks to a lending and construction boom, and has now been above the 50-point neutral level which separates expansion in activity from contraction for six straight months.

Output rose at the fastest pace since January 2011, with a reading of 53.7, and new orders also increased significantly, though companies continued to cut staff and at a slightly faster rate from November.

Order growth was fueled by stronger domestic demand as new export orders remained sluggish.

The private survey tends to focus more on small and mid-sized Chinese firms, which have had a harder time gaining traction than larger, state-backed firms.

An official factory survey on Sunday showed activity in the sector expanded for a fifth month in December, though growth slowed a touch more than expected as government measures to rein in soaring asset prices start to have an effect on the broader economy.

After a rocky start to the year, China's economy looks set to hit Beijing's 2016 growth target of 6.5 to 7 percent, after expanding 6.7 percent for each of the first three quarters.

Data last week showed profits at industrial companies rose at the fastest pace in three months in November, with the extra income offering some relief for the many debt-laden companies in smokestack industries.

Profits in November rose 14.5 percent to 774.6 billion yuan (USD 111 billion) from a year earlier, the highest since August's record 19.5 percent spike, National Bureau of Statistics (NBS) said.

Prices charged by Chinese manufacturers for their goods increased for the 10th straight month, boding well for profit margins.

"The Chinese manufacturing economy continued to improve in December...," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a note with the report.

"However, it is still to be seen if the stabilization of the economy is consolidated due to uncertainties in whether restocking and consumer price rises can be sustainable."

China's industrial sector has benefited this year from infrastructure and housing spending, which has spurred demand for materials from cement to steel. Reductions in excess capacity have further buoyed prices of raw materials.

But despite the rebound, most analysts say the economy will face challenges in 2017 as the impact of previous stimulus wears off and as the property sector slows. Auto sales could also slow from double-digit growth seen this year.

There are also signals from China's top leaders that more will be done in 2017 to crack down on asset bubbles and tackle a mountain of debt, even at the expense of slower growth, meaning additional stimulus measures could be limited.

China's massive export sector also faces risks next year after the surprise election of Donald Trump as the next U.S. president. Trump has threatened tariffs on Chinese imports.

The Chinese government should set a more flexible target for economic growth this year to give more space for reform efforts, a central bank adviser told the official Xinhua news agency in comments published on Sunday.

Read more at: http://www.moneycontrol.com/news/wo...aixin-pmi_8198781.html?utm_source=ref_article

if the US imposes 45% tariff on Chinese goods, then everything in the USA will have a price hike, it will cancel out the wage increase. China may pick on all the stuff export to China from the USA. let's see what happen.

45% tariff on Chinese goods? Who will buy US debts then? Indians?

 

[TaiShang]

Tilting, tilting, abandon ship, abandon ship.

Jan 03, 2017, 08.12 AM | Source: Reuters

China Dec factory activity rises to near 4-year high: Caixin PMI

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) rose to 51.9 on a seasonally adjusted basis, from 50.9 in November and easily beating analysts' forecasts of 50.7.

China's factory activity picked up more than expected in December as demand accelerated, with output reaching a near six-year high, a private business survey showed on Tuesday, giving the manufacturing sector a solid boost heading into 2017.

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) rose to 51.9 on a seasonally adjusted basis, from 50.9 in November and easily beating analysts' forecasts of 50.7.

The index has been slowly building momentum thanks to a lending and construction boom, and has now been above the 50-point neutral level which separates expansion in activity from contraction for six straight months.

Output rose at the fastest pace since January 2011, with a reading of 53.7, and new orders also increased significantly, though companies continued to cut staff and at a slightly faster rate from November.

Order growth was fueled by stronger domestic demand as new export orders remained sluggish.

The private survey tends to focus more on small and mid-sized Chinese firms, which have had a harder time gaining traction than larger, state-backed firms.

An official factory survey on Sunday showed activity in the sector expanded for a fifth month in December, though growth slowed a touch more than expected as government measures to rein in soaring asset prices start to have an effect on the broader economy.

After a rocky start to the year, China's economy looks set to hit Beijing's 2016 growth target of 6.5 to 7 percent, after expanding 6.7 percent for each of the first three quarters.

Data last week showed profits at industrial companies rose at the fastest pace in three months in November, with the extra income offering some relief for the many debt-laden companies in smokestack industries.

Profits in November rose 14.5 percent to 774.6 billion yuan (USD 111 billion) from a year earlier, the highest since August's record 19.5 percent spike, National Bureau of Statistics (NBS) said.

Prices charged by Chinese manufacturers for their goods increased for the 10th straight month, boding well for profit margins.

"The Chinese manufacturing economy continued to improve in December...," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a note with the report.

"However, it is still to be seen if the stabilization of the economy is consolidated due to uncertainties in whether restocking and consumer price rises can be sustainable."

China's industrial sector has benefited this year from infrastructure and housing spending, which has spurred demand for materials from cement to steel. Reductions in excess capacity have further buoyed prices of raw materials.

But despite the rebound, most analysts say the economy will face challenges in 2017 as the impact of previous stimulus wears off and as the property sector slows. Auto sales could also slow from double-digit growth seen this year.

There are also signals from China's top leaders that more will be done in 2017 to crack down on asset bubbles and tackle a mountain of debt, even at the expense of slower growth, meaning additional stimulus measures could be limited.

China's massive export sector also faces risks next year after the surprise election of Donald Trump as the next U.S. president. Trump has threatened tariffs on Chinese imports.

The Chinese government should set a more flexible target for economic growth this year to give more space for reform efforts, a central bank adviser told the official Xinhua news agency in comments published on Sunday.

Read more at: http://www.moneycontrol.com/news/wo...aixin-pmi_8198781.html?utm_source=ref_article

Now this makes more sense...

Trade volume increases, but the share of export to GDP decreases. This means China grows qualitatively and indigenously, with less dependence on limited overseas markets.

Last year, during the double big meeting, they already discussed future market will be in central Asia, SEA, Africa and Latin America etc as US and Europe market are already saturated.

China is already one step ahead.

I agree. The OBOR has been the right policy coming at the right time. It makes more sense for China to increase connectivity by opening up markets like that of India, which has become second largest smart phone market, than saturated US.

 

[ahojunk]

Look at the big picture.

If I were to fight a military war, I won't choose to fight with US, the biggest and strongest military in the world.
That's like committing suicide.

Likewise, if I were to fight a trade war, it would be economic suicide to fight with the biggest trading nation in the world.

Mark my words, there won't be a trade war between China and US. Only the small pawns will be sacrificed. Throughout history, that's how geopolitical games are played and this will continue.

 

[TaiShang]

Look at the big picture.

If I were to fight a military war, I won't choose to fight with US, the biggest and strongest military in the world.
That's like committing suicide.

Likewise, if I were to fight a trade war, it would be economic suicide to fight with the biggest trading nation in the world.

Mark my words, there won't be a trade war between China and US. Only the small pawns will be sacrificed. Throughout history, that's how geopolitical games are played and this will continue.

I agree. I do not believe China will directly engage the US militarily until/unless its very national integrity is challenged. Most likely, the bitter fight will concentrate on the economic front. China has two options, as I see it:

1。To confront the US head to head and in a reciprocal manner.

2。To make the US less relevant by by-passing and off-setting it, which is, in the, medium to long term, a greater punch on the US hegemony.

China is a more relevant and indispensable nation in terms of trade penetration and global economic growth. The OBOR framework has proven to be prophetical, standing in contrast to the rising US protectionism. I guess the growth potential of the rest of the world minus the US is enough for China to ensure its twin centennial goals of 2020 and 2049.

The figures in the OP exactly point out to such a new reality. The US debt-driven consumption no longer generates appetite.

 

[Bussard Ramjet]

Chinese economy called invulnerable to trade war
China Daily, January 3, 2017

A worker looks closely as containers are unloaded in Qingdao Port, Shandong province. [Photo/China Daily]


Anyone fancying a trade war with China might have missed their best opportunity, according to trade officials and economic advisers, who said the Chinese economy has already passed the stage of being vulnerable to such actions.

They said trade is no longer a main factor contributing to the nation's GDP growth, and the country has made preparations in the past few years for taking on the challenge of a possible rise in protectionism.

They also said that trade was not among the key tasks assigned by the just-completed Central Economic Work Conference, a yearly top-level decision-making meeting to map out the development strategy for the coming year.

In the conference's communique, only the quality of import and export goods was briefly mentioned.


More than ever, China is relying on its own reform and stability for building its economic strength, they said.

Nonetheless, Li Guanghui, vice-president of the Chinese Academy of International Trade and Economic Cooperation affiliated with the Ministry of Commerce, said that this year, "protectionism will continue to rise and trade frictions will become more violent".

One of the worst trade frictions, he said, could occur between China and the United States, since president-elect Donald Trump has said he will impose punitive tariffs on imports from China.

Zhang Yansheng, chief economist of the China Center for International Economic Exchanges, a think tank close to the government, said that the expected rise in the US inflation level this year would weaken US exports and stimulate imports, resulting in a growing trade deficit and an eagerness by Washington to make China a scapegoat.

Should that happen, "China must handle it well", Zhang said, adding that China has no shortage of available countermeasures.

China's confidence in facing protectionism by the US lies in the reform it recently has made. Its growth is no longer export-driven but led primarily by domestic consumption, which accounted for 66.4 percent of its GDP growth in 2015, according to Ministry of Commerce data.

"China has reduced its reliance on exports for growth to a great extent, thanks to its prompt shift to domestic demand when global market demand was no longer in high growth in the last few years," said Zhang.

At the same time, the country is improving industrial quality and sharpening its competitive edge in the global market, he noted.

Yu Jianlong, secretary-general of the China Chamber of International Commerce, said Trump is unlikely to have a major impact on China-US trade, much less on China's overall strength.

The US has taken repeated protectionist measures against China in the past 15 years, he said, but bilateral trade has "by and large" fared well－thanks to the long value chain of Chinese industry and the capability of the world's second-largest economy to provide for the various needs of the US market.

Even the US' failure to recognize China's market-economy status will not be able to derail China-US trade, Yu said.

Trade volume between the world's two largest economies has increased rapidly, growing from about $70 billion 20 years ago to nearly $600 billion in 2015.

According to the World Trade Organization, China's merchandise exports amounted to almost $2.3 trillion in 2015, despite a 3 percent dip from the previous year.

If Trump, who takes office on Jan 20, imposes a 45 percent tariff on Chinese goods and reduces China's exports to the US by half, it is unlikely to affect the nation's highly diversified global trade income picture, a HSBC report said in November.

More than 60 percent of China's exports are currently directed to markets other than the US, Japan and the eurozone, the report said.

This is a feel good article.

No doubt the dependency of China on trade has come down a little bit in recent years, but China is still hugely dependent on trade!

Also, yes current growth is no longer coming from trade, but past growths have come from trade, and a lot of pie is built up on trade. If there were to ever be a total trade freeze, which I think is unlikely, it would lead to a Chinese recession of major magnitude. (Along with the world of course)

Also, while yes, China has some counter measures of its own, they are in no way comparable to what US has got over China. Just look at China's exports to the US, and the vice versa.

The simple matter of fact is that Chinese economy is more reliant on trade than US, and particularly much more reliant on US markets than the other way round.

That is a fact.

I just can't get how fanboys here can overlook even facts.

 

[TaiShang]

This is a feel good article.

No doubt the dependency of China on trade has come down a little bit in recent years, but China is still hugely dependent on trade!

Also, yes current growth is no longer coming from trade, but past growths have come from trade, and a lot of pie is built up on trade. If there were to ever be a total trade freeze, which I think is unlikely, it would lead to a Chinese recession of major magnitude. (Along with the world of course)

Also, while yes, China has some counter measures of its own, they are in no way comparable to what US has got over China. Just look at China's exports to the US, and the vice versa.

The simple matter of fact is that Chinese economy is more reliant on trade than US, and particularly much more reliant on US markets than the other way round.

That is a fact.

I just can't get how fanboys here can overlook even facts.

It does not make fact just because you type it in bold.

Bring up numbers just like the OP does and put forward your argument accordingly. Otherwise, do not litter the thread.

@Mods , please kindly make sure this thread would not be derailed.

 

[Bussard Ramjet]

It does not make fact just because you type it in bold.

Bring up numbers just like the OP does and put forward your argument accordingly. Otherwise, do not litter the thread.

@ahojunk , please kindly make sure this species being would not turn the thread into filth.

Well @ahojunk , what does filth mean? Is it stating of facts, and counter opinions?

As for facts, here they are:

GDP of some top countries (According to IMF) (in millions of dollars)

1

United States 18,561,930
2

China[n 2] 11,391,619
3

Japan 4,730,300
4

Germany 3,494,900
5

United Kingdom 2,649,890
6

France 2,488,280
7

India 2,250,990
8

Italy 1,852,500
9 Brazil 1,769,600
10 Canada 1,532,340

Top Exporting Countries https://www.wikiwand.com/en/List_of_countries_by_exports


1 China $2,143,000,000,000[4] 2015 est.
2 United States $1,510,000,000,000[5] 2015 est
3 Germany $1,309,000,000,000[6] 2015 est.
4 Japan $622,000,000,000[7] 2015 est.
5 South Korea $548,800,000,000[8] 2015 est.
6 France $510,500,000,000[9] 2015 est.
7 Hong Kong $505,700,000,000[10] 2015 est.
8 Netherlands $476,500,000,000[11] 2015 est.
9 Italy $450,100,000,000[12] 2015 est.
10 United Kingdom $436,200,000,000[13] 2015 est.
11 Canada $411,000,000,000 2015 est.
12 Mexico $381,000,000,000[14] 2015 est.
13 Singapore $377,100,000,000 2015 est.
14 Russia $341,500,000,000 2015 est.
15 Taiwan $335,500,000,000 2015 est.
16 United Arab Emirates $333,300,000,000 2015 est.
17 Switzerland $303,500,000,000 2015 est.
18 Spain $277,900,000,000 2015 est.
19 India $272,400,000,000 2015 est.



Exports as a percentage of GDP for some top countries:

USA: 8.1%
China 18.4%
Japan 13.2%
Germany 37.5%
UK 16.45%
France 20.5%
India 12.1%
Italy 24.3%


One can clearly see that China depends more than the US, certainly less than some european countries, but the talk here is of a trade war between US and China.

So let's see some China and US specific statistics:

China's exports to the US 470 billion dollars

US exports to China: 123 billion dollars

China's exports to US as a percentage of Chinese GDP: 4.12%

US exports to China as a percentage of US GDP: 0.6%

 

[DoTell]

Look at the big picture.

If I were to fight a military war, I won't choose to fight with US, the biggest and strongest military in the world.
That's like committing suicide.

Likewise, if I were to fight a trade war, it would be economic suicide to fight with the biggest trading nation in the world.

Mark my words, there won't be a trade war between China and US. Only the small pawns will be sacrificed. Throughout history, that's how geopolitical games are played and this will continue.

But if you were to fight a verbal war, which country you don't want choose? You guessed it, none other than the greatest spin masters of India

 

[Bussard Ramjet]

Chinese economy called invulnerable to trade war
China Daily, January 3, 2017

A worker looks closely as containers are unloaded in Qingdao Port, Shandong province. [Photo/China Daily]


Anyone fancying a trade war with China might have missed their best opportunity, according to trade officials and economic advisers, who said the Chinese economy has already passed the stage of being vulnerable to such actions.

They said trade is no longer a main factor contributing to the nation's GDP growth, and the country has made preparations in the past few years for taking on the challenge of a possible rise in protectionism.

They also said that trade was not among the key tasks assigned by the just-completed Central Economic Work Conference, a yearly top-level decision-making meeting to map out the development strategy for the coming year.

In the conference's communique, only the quality of import and export goods was briefly mentioned.


More than ever, China is relying on its own reform and stability for building its economic strength, they said.

Nonetheless, Li Guanghui, vice-president of the Chinese Academy of International Trade and Economic Cooperation affiliated with the Ministry of Commerce, said that this year, "protectionism will continue to rise and trade frictions will become more violent".

One of the worst trade frictions, he said, could occur between China and the United States, since president-elect Donald Trump has said he will impose punitive tariffs on imports from China.

Zhang Yansheng, chief economist of the China Center for International Economic Exchanges, a think tank close to the government, said that the expected rise in the US inflation level this year would weaken US exports and stimulate imports, resulting in a growing trade deficit and an eagerness by Washington to make China a scapegoat.

Should that happen, "China must handle it well", Zhang said, adding that China has no shortage of available countermeasures.

China's confidence in facing protectionism by the US lies in the reform it recently has made. Its growth is no longer export-driven but led primarily by domestic consumption, which accounted for 66.4 percent of its GDP growth in 2015, according to Ministry of Commerce data.

"China has reduced its reliance on exports for growth to a great extent, thanks to its prompt shift to domestic demand when global market demand was no longer in high growth in the last few years," said Zhang.

At the same time, the country is improving industrial quality and sharpening its competitive edge in the global market, he noted.

Yu Jianlong, secretary-general of the China Chamber of International Commerce, said Trump is unlikely to have a major impact on China-US trade, much less on China's overall strength.

The US has taken repeated protectionist measures against China in the past 15 years, he said, but bilateral trade has "by and large" fared well－thanks to the long value chain of Chinese industry and the capability of the world's second-largest economy to provide for the various needs of the US market.

Even the US' failure to recognize China's market-economy status will not be able to derail China-US trade, Yu said.

Trade volume between the world's two largest economies has increased rapidly, growing from about $70 billion 20 years ago to nearly $600 billion in 2015.

According to the World Trade Organization, China's merchandise exports amounted to almost $2.3 trillion in 2015, despite a 3 percent dip from the previous year.

If Trump, who takes office on Jan 20, imposes a 45 percent tariff on Chinese goods and reduces China's exports to the US by half, it is unlikely to affect the nation's highly diversified global trade income picture, a HSBC report said in November.

More than 60 percent of China's exports are currently directed to markets other than the US, Japan and the eurozone, the report said.

Just to emphasize here, I do agree with parts of this article. It is true that China was far more vulnerable in 2008, 2009, as compared to today.

Yet, China is still dependent on trade, more so than the US, especially for its exports.

A US vs China trade war would hurt both, but it would hurt China more. That is a fact.