Report
Patrick Artus

Could China weather a sharp fall in its exports to the United States?

If China lets the trade conflict with the United States degenerate (by not opening its markets, by taking retaliatory measures against the United States), the rise and the general implementation of tariffs in the United States on imports from China will eventually push down Chinese exports to the United States. Can China take this risk? Would its economy weather a sharp fall in its exports to the United States? We have to base our analysis on the (quite high) weight of these exports and the related investments, as well as the current state of Chinese growth (quite weak); But we also have to take into account that if China exports less to the United States, other countries will partly replace China, and China will be able to export more to these countries, but this cannot b e seen currently; We also have to look at China’s capacity to stimulate its domestic demand more to replace exports. This capacity is currently quite weak. Altogether, China’s capacity to start a hard trade conflict with the United States is in our opinion therefore quite weak.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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