US-China tariff Negotiation with arithmetic rather than mathematics (2) China's Arithmetic

US-China tariff Negotiation with arithmetic rather than mathematics (2) China's Arithmetic


Unlike the US, where the economy is brisk, China is responding to protection trade negotiations externally, and economic slowdown and structural reforms in the domestic market. It is fortunate that some of the recent economic indicators are improving, but the situation is quite different compared to the US, which has been continuing to expand for the longest period.

As a result, China's negotiating deadline is shorter than that of the United States. Although the size of the damage has already been estimated by various agencies, there is also a limit to the extent to which the indirect effect will increase. The ratio of exports of China's GDP, and the range of tariffs imposed on China's exports to the US.

As the customs duties have been decided, the export of the goods is bound to suffer short-term disruption. The situation is different from the past year when exports were saved as pre-orders were added ahead of the possibility of imposing tariffs. The numbers required for arithmetic are as follows.


▫ Items subject to tariffs ($ 250 billion) account for 52% of exports to the US, 10%

▫ China's exports account for 20% of GDP → China's GDP accounts for 2%

▫ If you divide by 12 months, the effect for 1 month is 0.17%

▫ China's growth rate in 2006 was 6.6%, and China's GDP growth in the first quarter was 6.4%. China's economic growth target for the year was 6.0 ~ 6.5%, down from 6.0%

Of course, there is no doubt that exports will become 'zero' if tariffs rise. Nevertheless, the possibility that exports will continue without interruption is extremely low in a situation where the variables are extremely high in tariff policy. It should be noted that if the delay of negotiations lasts more than one quarter, it may be necessary to revise China's economic growth rate this year.