What's happened
China's economy is under pressure from rising tariffs imposed by multiple countries, including the US and EU, targeting key exports like solar panels and electric vehicles. Economists warn that these tariffs could exacerbate existing economic weaknesses, particularly as domestic demand remains low and external pressures mount.
Why it matters
What the papers say
According to the South China Morning Post, rising tariffs from countries like the US and EU are putting pressure on China's economy, which is already facing significant internal challenges. Christopher Beddor from Gavekal Dragonomics noted that strong exports are masking severe weaknesses, and if external demand falters, China will face tough choices regarding debt and growth.
In contrast, Business Insider UK highlights that the potential for a Trump presidency could lead to tariffs exceeding 60% on Chinese exports, which would significantly impact China's GDP growth. Rory Green from GlobalData.TS Lombard emphasizes that the current economic situation is precarious, with high youth unemployment and a property crisis exacerbating the challenges.
The IMF's analysis, as reported by Axios, suggests that the trade imbalance is more a result of macroeconomic factors than industrial policy, indicating that China's savings and the US's spending habits are key drivers of the current economic landscape. This perspective challenges the narrative that tariffs alone are the solution to trade imbalances.
How we got here
China's economy has struggled to recover from pandemic-related lockdowns, facing issues such as a property crisis and high youth unemployment. Recent tariff increases from various countries threaten to further impact its export-driven growth model.
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More on these topics
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The United States of America, commonly known as the United States or America, is a country mostly located in central North America, between Canada and Mexico.
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China, officially the People's Republic of China, is a country in East Asia. It is the world's most populous country, with a population of around 1.4 billion in 2019.