Commentary: Why Trump’s Tariffs Are Blessing in Disguise for China

The document analyzes the impact of U.S. tariffs on China, focusing on how these measures, ostensibly detrimental, may actually benefit China. The narrative begins by explaining the broad U.S. tariff plan to penalize countries based on existing rates and trade barriers, with China often perceived as the major target of these policies [para. 1]. Despite this perception, China's economic data suggests that the effect on its economy may be overstated. In 2024, China was the largest goods exporter globally, with $3.6 trillion in exports, but its exports to the U.S. were valued at $525 billion, accounting for only 15% of China's total exports. The potential revenue loss from reduced exports to the U.S. could be offset by China's strong domestic retail market, valued significantly above its exports [para. 2][para. 3].

The document further argues that China's economic slowdown is more closely linked to domestic factors rather than external trade issues. The property market decline, with housing starts dropping substantially over recent years, has contributed to diminished domestic demand and economic stagnation, rather than export challenges fueled by tariffs [para. 4]. Evidence is presented that U.S. tariffs have not effectively hindered trade with China. U.S. imports from China increased from $430 billion in 2017 to $525 billion in 2024, and improvements in product quality and cost-competitiveness have favored Chinese exports despite these barriers [para. 5].

Amid tariff threats, China has responded by implementing measures to enhance GDP growth, such as initiatives to stimulate domestic consumption and encourage the spending of household savings [para. 7][para. 8]. Recent policies showcase Beijing’s shift from sporadic subsidies to comprehensive strategies involving stock and property market supports, which are unlike earlier piecemeal approaches [para. 8]. Increasing internal investment, particularly in high-tech industries, has also been noted, emphasizing a shift from low to higher-value manufacturing, driven by adaptability within its workforce [para. 9][para. 10]. The external pressures have motivated China to focus on technological advancements, particularly emphasizing AI, to counter demographic shifts and boost productivity [para. 11].

This development might, however, introduce new challenges, including potential unemployment due to increased AI and technology utilization, with a significant portion of tasks potentially being automated [para. 13]. Such changes could lead to reduced household incomes and private consumption, contrary to initial expectations about the impact of U.S. tariffs, thereby also affecting job markets in unexpected ways [para. 13]. The commentary is attributed to Raymond Yeung, the chief economist for Greater China at the Australia and New Zealand Banking Group Ltd., and edited for clarity by Caixin editors [para. 15][para. 16][para. 17].

The document affirms that these perspectives are personal to the authors and may not reflect the broader views of Caixin Media, inviting further opinions and discourse from readers [para. 18][para. 19][para. 20].