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The Impact Of US Tariffs On China Would Be Worse In 2019

The heavy trade tariffs that were imposed on China by United States could have a strong impact on China next year and has the potential to dent its economy say economists. According to principal economist for China Tom Rafferty the direct impact of tariffs will be visible next year and will slow down economy as even global demand is going to hit a low. The rapid growth of Chinese economy has been driven by manufacturing and exports which had helped it become the second largest economy in the world. But now the growth has hit a tough patch as global growth is slowing down and looks set towards downtrend.

Experts says that as the nation’s GDP has fallen to a pace that has not been witnessed for two decades. To reduce chances of financial breakdown due to debt China’s government has been trying to move its economy towards consumption without relying on debt to fuel the demand for expensive goods and services. Trade worries have already started affecting consumer sentiments as households are worried about how the trade war will finally come to an end as though both the US and China have decided on a temporary ceasefire, new escalations can start any-time next year.

Tariffs on Chinese goods have made them expensive for US consumers forcing them to shift focus to other cheaper alternatives that has led to reduction in demand for Chinese products in local markets. The signs of trouble are already visible as there was drastic drop in exports which fell down to 5.4% from a high Y-O-Y growth of 14.4% and 15.6%. In the Guangdong region which is regarded as an export hub of China they stopped publishing a monthly business activity index since October. Experts hope that US and China will reach a compromise soon as then slowdown in the latter’s property market will have a big impact on its economy.

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