Two of the world's biggest economies are currently embroiled in a bitter trade war that has seen close to $500 billion worth of tariffs being levied among various goods, both Chinese and American. According to S&P Global Ratings, the grasps of the trade war may soon reach the Chinese tech market putting in danger years of advancements and billions worth of investments.
While this probably presents a lot of negative tone to the Chinese economy, it is important to note that despite massive amounts of tariffs being levied on Chinese imports, the trade war has had minimal impact on the country's growth. Some observers are even confident that China can withstand the incoming storm and that the negative effects of the trade war will be totally manageable.
What is far more worrying is the effect of the trade war on China's tech sector. China is highly dependent on technological advancements to push productivity growth. It is also important to note that the country's once massive manufacturing sector is experiencing slow growth as assembly lines and facilities are turning into automation.
According to some market analysts, now that the United States has imposed tariffs on goods including tech products and raw materials, it will be very hard for Chinese tech companies to gain access to foreign technologies. Many observers also believe that the trade war might disrupt some tech supply line which will eventually lead to a hike in prices.
In recent years, China has already started developing homegrown technologies and innovations. However, many of the country's tech firms and facilities still rely on foreign supply lines most crucial of these supplies are semiconductors.
Despite this, the S&P Global Ratings reports are still positive that Chinese tech firms will endure this storm. The report said that while Chinese tech firms will have a hard time acquiring some key supplies, the trade war will not trigger a significant drop in terms of growth of the industry in the short term. The same report added that trade war will most likely affect China's potential growth when viewed in the medium to long-term assessment.
The S&P Global Ratings report stated that China will no doubt manage the short-term effects of the trade war against the United States. The report added that should the trade war extends to a longer period, China's growth will continue to be positive, although at a slower pace compared to what it is today.
