Beijing is expected to reset its economic growth target to around 5 percent by 2025 despite threats of higher tariffs during Donald Trump's second term as president, according to Zhang Ming, deputy director of the Institute of Finance and Banking at the Chinese Academy of Social Sciences.
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| The tariff shock after Trump's election could have a significant negative impact on China's export growth by 2025, according to economist Zhang Ming. (Source: Youtube) |
The potential trade shock could slow the economy's overall growth rate as early as 2025, but Beijing is expected to regain momentum by the end of this year to meet its annual growth target, Zhang Ming predicted.
Previously, during his election campaign, President-elect Donald Trump threatened to impose a 60% tax on all imports from China if he was re-elected.
“The tariff shock after Trump’s election could have a significant negative impact on China’s export growth by 2025,” Zhang Ming wrote in an article posted on his personal WeChat social media channel on Wednesday.
Currently, exports account for about 20% of China's gross domestic product (GDP), and the US is one of its largest trading partners.
During his first term as President, Mr. Trump launched a trade war with China and issued strong warnings to Beijing during the election campaign, such as revoking Permanent Normal Trade Relations (PNTR) with China or tightening restrictions on Chinese manufacturers setting up factories in Mexico to avoid taxes in the US...
PNTR status is a special mechanism that the US grants to a country to establish trade relations with the US on an equal basis. This status is similar to Most Favored Nation (MFN) status, which is used by the World Trade Organization (WTO) and many other countries.
“Under this scenario, the Chinese government is expected to strengthen expansionary macroeconomic policies to achieve growth of around 5%. Specifically, Beijing may set the fiscal deficit-to-GDP ratio at 4-5% in 2025, up from the 3% deficit target set in March this year,” he forecast.
In addition, the central government also has the ability to issue large-scale special treasury bonds to facilitate the change.
On monetary policy, the top economist believes the People's Bank of China (PBOC) has room to further cut the reserve requirement ratio - the amount of cash that commercial banks must hold as reserves - and interest rates, maintaining an expansionary stance until the consumer price index (CPI) reaches around 2%.
China's CPI has hovered around zero percent since March last year, with the headline inflation index rising just 0.4 percent year-on-year in September 2024, after breaking 2 percent in January 2023.
“Amid the worsening external environment, the Chinese government will step up efforts to reduce local government debt and promote the stability of the property market,” Zhang said.
Property purchase restrictions in tier-one cities may be lifted next year to stabilize home prices in prime areas, he added.Beijing has rolled out a series of stimulus measures targeting the stock and housing markets since late September to boost the sluggish domestic economy, including a key interest rate cut.
Market watchers expect the special local government bonds to be issued after the ongoing meeting of China's top legislature - the National People's Congress Standing Committee, which ends on November 8.
Source: https://baoquocte.vn/chuyen-gia-hang-dau-mac-ong-trump-hu-doa-trung-quoc-van-tu-tin-dat-muc-tang-truong-5-cho-nam-2025-290282.html
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