New US tariffs would drag China's growth below 6%: Poll

Shipping containers from China at the Port of Long Beach in Los Angeles last year. The 10 per cent tariffs that US President Donald Trump has threatened to impose on US$300 billion (S$416 billion) of Chinese goods would see China's annual economic gr
Shipping containers from China at the Port of Long Beach in Los Angeles last year. The 10 per cent tariffs that US President Donald Trump has threatened to impose on US$300 billion (S$416 billion) of Chinese goods would see China's annual economic growth slumping to its slowest since 1990, according to a Bloomberg survey of 14 economists.PHOTO: AGENCE FRANCE-PRESSE

HONG KONG • The new tariffs that US President Donald Trump has threatened to impose on US$300 billion (S$416 billion) of Chinese goods would drag China's annual economic growth below 6 per cent, according to a Bloomberg survey, which would be the slowest expansion since 1990.

Once introduced, the extra 10 per cent tariffs would cut up to 0.5 percentage point from gross domestic product expansion compared with the previous year, according to the survey of 14 economists by Bloomberg.

With the nation's growth already forecast to slow to 6 per cent next year, that would drag it below the lower bound of the government's current economic target.

The outlook underlines what is at stake for the world's second-largest economy as it faces weakening demand at home and the effects of the trade war with the United States.

But Mr Trump has already delayed some of the tariff increases due to take effect on Sept 1 amid economic turbulence, and face-to-face talks due to resume next month offer a chance for further reprieve.

"The US moves will pose some challenges to China's exports and economy, but overall the impact is controllable," Chinese Commerce Ministry spokesman Gao Feng said in a press conference on Thursday.

"China will be forced to retaliate if the US follows through with new tariffs," he said.

The new tariffs will subtract between 0.5 percentage point and 1 percentage point from China's export expansion, according to a dozen analysts who answered a question on that.

The US will impose some of the tariffs from Sept 1, while the rest will go into effect in December.

Mr Trump said on Wednesday that he was the "chosen one" to wage a trade war with China and asserted that he was winning.

"This is a trade war that should have taken place a long time ago," he told reporters at the White House. "Somebody had to do it. I am the chosen one."

Even with the politically sensitive 70th anniversary of the Chinese Communist Party approaching in October, policymakers are showing little sign of wanting to roll out large-scale stimulus to prop up the growth numbers.

Instead, officials have tweaked policy settings and are prioritising stability. The authorities are mulling over an increase in regional-government bond quotas that allow infrastructure spending, and the central bank has pushed through a reform that may lower borrowing costs.

In a separate survey, analysts said they did not expect the People's Bank of China to cut its rates on medium-term funding next week.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on August 24, 2019, with the headline 'New US tariffs would drag China's growth below 6%: Poll'. Print Edition | Subscribe