Trump’s trade actions are affecting China….
They are taking political and economic steps to ride his action out….
The leading export indicator fell into the contraction zone from June, when the Trump administration announced tariffs on US$50 billion of Chinese merchandise.
Beijing and Washington levied 25 per cent tariffs on the first batch of $34 billion worth of each other’s products in July, and the second batch of $16 billion on each side came into effect last week.
Zhang Jun, chief economist of Morgan Stanley Huaxin Securities, said the outlook for China’s export performance is gloomy in the coming months because many exporters have already “front-loaded” their shipments in the face of additional tariffs from the U.S.
He said there are few measures Beijing can take to revive its overseas sales. “The government emphasis will be put on boosting domestic demand to offset declines in exports,” he said.
China has started to roll out stimulus measures, such as encouraging local governments to sell bonds to raise money for infrastructure spending, and rearranging its economic priorities to keep overall economic growth on track.
Trade is one of six areas highlighted by the top leadership to be stabilized with the trade war with Washington set to show an impact.
China’s overall manufacturing PMI rose by 0.1 points to 51.3 in August, while the production subindex rose 0.3 points to 53.3, the statistics agency’s data showed.
Iris Pang, chief China economist of ING Bank, said Beijing’s push for accelerated infrastructure investment had come into effect.
“Fiscal stimulus and monetary easing will facilitate faster production activity from infrastructure investment projects and their financing,” she wrote in a research note…..
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