China maintains cards in the US tariff

The United States and China are being imprisoned in a dangerous commercial confrontation, as the two largest economies in the world are trading a dream, as Donald Trump is demanding Beijing for a deal of his administration.

China depends on the United States as an almost indispensable market for its manufacturer, but experts warn that Washington should not reduce Beijing’s ability to resist the forced Trump tactics.

A mixture of central political control, increasingly diverse export markets and its virtual mixing over some strategic biomus, including rare ground minerals, gives Beijing a lot of negotiating power. The question is to what extent can its influence be used without offering more damage itself.

Commercial authority

China had a trade surplus of about 300 billion dollars with the United States last year, heading about 15 percent of its total exports to the United States. Trump’s tariff From 145 per cent would cause great pain on Beijing.

But international economists said this ignores a decisive fact: China can replace its imports from the United States more easily than vice versa.

American commodity exports to China focus greatly on agriculture-such as soybeans, cotton, beef and poultry-and thus they are of low value. Many American imports from China – electronics, machinery and some manufactured minerals – are the opposite.

Marta Benjoa, a professor of international economics at New York City University, said that although the United States and China have been largely interconnected in trade, this means that the final balance of the risk was on the American side.

“Dependence on the United States on China is higher, because China can give agricultural products from other places more easily than the United States can replace electronics and machines.” “Beijing is already purchasing soybeans from Brazil, for example, so in the end, China has more lifting.”

the Decrease It also made it more expensive for the United States to import goods.

Trade War pain will remain perceived in China, which imports high-end products from the United States, including parts of aircraft, pharmaceutical preparations and semi-conductors-although Washington has sought access to chips in recent years. Many American companies are included in supply chains on the country.

Goldman Sachs estimated that the workers are 10 millimeters n 20 million in China may be exported to the United States. And they wrote last week: “It is expected that the combination of very high US tariffs will be born, and exports will decline sharply to the United States, and the slow global economy is expected to generate great pressure on the Chinese economy and the labor market.”

Strategic “Power”

Since Washington imposed a sectoral tariff on steel, aluminum, solar panels and washing machines in 2018 and 2019 during the first period of Trump, China tried to reduce its dependence on exports to American consumers. Its share of US imports fell from 21 percent in 2016 to 13.4 percent last year, according to US government data, reducing Beijing’s commercial exposure.

Meanwhile, Chinese production capacity has been redirected across Southeast Asian countries such as Vietnam and Cambodia, as Chinese manufacturers have benefited from cheaper workers and reduce exposure to American definitions. Exports to Vietnam increased by 17 percent in March, Data has been released this week Show.

How much is Trump to close the “back door” of Chinese exports still to be seen. Vietnam, which It now runs the trade surplus of $ 124 billion With the United States, it was threatened with a 46 percent “mutual” tariff – although this was suspended for 90 days.

Alicia Garcia Herro, the chief economist in Asia Pacific at the French Investment Bank, Natixis and its oldest colleague at the Think Think Bruegel Center, said that temporary suspension provided a breathing space. “Basically, both sides give 90 days of space to discover things.”

But even if there is a difficult endowment on Chinese exports, Garcia Hero said that the influence would not be catastrophic on the growing economy in China. The country’s gross domestic product grew by 5 percent in the past year, and 1.5 percentage points were derived from World Trade surplus of $ 1TN.

“China is a huge flexible economy.”

But analysts have also warned that Chinese attempts to redirect the extra capacity to alternative markets, including the European Union, India and countries around the world, can call for reaction.

“Because of the surplus goods that China will look forward to unloading, I expect that other countries will interact with the potential flood,” said Alex Capri, the chief lecturer at the College of Business Administration at the National University of Singapore.

Financial property

China has more influence from A large pile of US government debts It has accumulated, which can sell in theory to reduce its exposure. This, in turn, may raise concerns about the attractiveness of American assets and lead to further decreases in the value of the dollar debt and the US government.

Zerlina Zeng, the head of the Creditsights Credit Strategy in Creditsights, indicated that the sale of the treasury will also strike China, due to the size of its holdings.

She said, “We expect China to continue to diversify its dollar reserves in other currencies as a long -term allocation goal.”

Critical minerals

The United States also depends on China for many rare rare ground minerals for modern manufacturing, as in electric vehicle batteries. Beijing controls more than two-thirds of the rare global production of the Earth and more than 90 percent of processing capabilities-a decisive point in the leverage.

Trump excluded cash minerals from his first tour of “mutual” definitions in recognition of American weaknesses. But these concessions may not be sufficient to avoid the show crisis if China dug.

China Setting export controls In seven other rare ground elements last week, including Dysprosium and Terbium, which are essential ingredients in products such as jet engines and EVS.

Tyranium on democracy

While the ruling Communist Party in China is not immune to volatility in public opinion, it is less interactive to pressure from the White House, which was already forced to respond to turmoil in bond and stock markets and threaten high prices.

Alfredo Montfafe Hilo, President of the China Center at the New York Conference Council thinking center, pointed out that Beijing-although competition with his challenges-was entering into trade with a greater ability to stimulate its economy in a slowdown.

It also has more wheels to address its local market, which the Chinese authorities see as an indicator of social stability and economic feeling. Beijing has greatly entered the market in recent weeks, with The “national team” for state institutions Driving coordinated procedures to support stock prices.

But the China government is very sensitive to the presentation of general discontent. In late 2022, its restrictions raised Covid-19 for three years shortly after the protests appeared in the main cities.

“From the market’s reaction, I say that the United States is currently (hurts me more),” added Julian Evans Brotshard, Capital Economics, added: “The United States is under pressure to try to come to the table and negotiate.”

But the first shakes of the trade war – such as the delay in sailing from the vast ports in China – for them To date, to feed open dissatisfaction In southern manufacturing provinces in China.

“I did not meet one person, even the manufacturers that were directly affected by the tariff, which blame Beijing,” said a foreign manufacturer in Guangdong Province. “The mood that I saw is Challenge. I think the way the government plays is now about national pride. “

Participated in additional reports from Chan Ho-Him in Hong Kong; Data is visualized by Alan Smith in London