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A senior Beijing adviser has warned that any attempt by President-elect Donald Trump to economically disengage from China could bear the brunt of US manufacturers’ reliance on low-cost Chinese parts, including in the defense industry. Will have to.
Ding Yifan, a researcher at China’s cabinet-affiliated State Council think tank, said Trump’s plan to raise tariffs to 60 percent would cut U.S. GDP growth in half and cause Chinese suppliers to reroute products through other countries. Will try to avoid taxes.
The blunt warning from an influential government adviser was among the clearest signs yet of Chinese concern about the threat of Trump’s tariffs and the possibility of escalating trade tensions between the two countries.
“If these military institutions do not have supplies from China, they will not be able to continue their production,” Ding, an expert at the State Council’s Development Research Center, told a government-sponsored briefing for international media.
“If [US leaders] Really implement trade friction or conflict policies, there will be serious consequences,” Ding said.
Beijing’s leaders have so far been largely reticent in commenting on Trump’s victory, although Chinese President Xi Jinping warned US counterpart Joe Biden at the weekend’s Epic summit in Peru that Washington would “retaliate” against Beijing’s ” “Red Lines” should not be crossed.
The letters included China’s right to economic development – a reference to US restrictions on high technology exports to China. But Xi said he would work with Trump and while he pushed back on trade restrictions, the tone of the meeting was constructive.
Chinese officials have been tough on Trump during his first term, in an approach that has become known as “wolf warrior” diplomacy, but analysts believe that this time around, Beijing will continue to do so under the new president-elect’s administration. Taking a wait-and-see approach.
As evidence of U.S. reliance on Chinese manufacturers, Ding cited comments at a conference in September where RTX Chief Executive Greg Hayes said the U.S. aerospace and weapons group had 2,000 suppliers in China.
Hayes told the Financial Times last year that Western companies could “minimize but not double” the risk from China and it would take years to find alternative suppliers.
With its economy suffering from a prolonged property downturn, China needs export markets to absorb output from its factories, which are suffering from weak domestic demand.
Ding was accompanied at Monday’s briefing by two other government-affiliated experts, including Wu Sa, an adviser to a think tank under China’s powerful planning body, the National Development and Reform Commission.
Ding portrayed Trump’s efforts to raise tariffs as a greater threat to the US economy than to China. He said that the US imports not only manufactured goods from China, but also a large portion of intermediate products that US factories incorporated into their goods.
“Downstream American companies will not be able to find substitute products in a very short time if Chinese companies are not able to supply them with products,” Ding said. “As a result, there will be more chaos in the U.S. economy.”
He also cited U.S. studies showing that U.S. consumers paid the lion’s share of the cost of the previous round of tariffs. The Peterson Institute for International Economics cautions consumers that such measures usually pay the bill.
“If they double the tariff, Chinese enterprises have their own ways of avoiding it to avoid risks. We can shift our trade to other countries,” he said. “But the final market changes. No, it won’t happen. [reduce] America’s trade deficit and this is just an illusion of the Trump administration.
While Ding claimed that the impact on China would be “modest”, economists have warned that the 60 percent tariffs would also have a big impact on the country’s GDP.
Yang Zhao, an economist at Shanghai’s Fudan University, estimated in a paper last year that in the early years of the trade war that began in 2018, China had to spend 0.29 percent of GDP in gross real income, compared to the U.S.’s GDP. Compared to 0.08 percent of PK.
