China appears ready to meet the challenges of the trade war head-on. According to reports, China will keep to the implementation of the measures meant to ease the impact of the trade dispute with the US. The tariffs are affecting China's economy, but China is not reeling from it.
Morgan Stanley chief China economist Robin Xing echoed confidence in the Chinese economy during the Morgan Stanley Tech, Media, and Telecom Conference. CNBC reports that it was held in Beijing; the economist cleared any doubts, saying that the firm expects no "major growth corrections." Instead, China's policies will continue steadily, with the impact softened by measures developed by the Politburo's policymakers.
These measures include, but are not limited to, credit boosts as well as tax cuts to ease credit and liquidity in the financial system. That being said, however, Xing expected the already slightly-weakened economy to further slip down as the month ends. However, this is more due to the measures yet to take effect than the tariffs hitting hard.
On the other side of the trade dispute, Trump is adamant in keeping China tax-ridden. He also said that companies that are 25 percent China-owned will be banned from deals involving US tech companies. This is in line with the administration's policy that anything dealing with US technology should not be shared or revealed to Chinese-owned companies, wholly or partially.
This, however, may backfire on the US. More than China is adjusting to the restrictions, these may prompt US companies to look for ways to keep their profits up. Rather than just keep selling to American consumers, they may just choose to uproot and seek other areas to put factories in. According to Wired, the Trump administration's policies may only create a shortage in tech from other countries like China, while China and other countries are free to share and collaborate.
It could also send the wrong signals to companies looking to invest in the US. Instead of restoring the competitiveness of these US companies, it may actually reduce that. The Trump administration's policies stand to alienate rather than invite.
China plans to handle the crisis differently than how it did in 2008, meanwhile. During that year, China went with a massive stimulus package. This time around, the packages will only be to defend China against the fallout of the dispute, which still stands to hurt the US more.
