Chinese markets have taken a tumble in the wake of Donald Trump’s historic election victory, amid fears the president-elect will impose high tariffs on Chinese goods.
Economists are talking about China “front-loading” exports for the final quarter of 2024 to beat Trump’s tariffs, which could begin in the third quarter of 2025. Factories in China are already increasing production in an attempt to flood the market with goods before Trump takes office.
Voice of America News (VOA) reported that outbound shipments from China “grew at the fastest pace in over two years in October as factories rushed inventory to major export markets in anticipation of further tariffs from the U.S. and the European Union.”
“Trump’s tariff threat is rattling Chinese factory owners and officials, with some $500 billion worth of shipments annually on the line, while trade tensions with the EU, which last year took $466 billion worth of Chinese goods, have intensified,” VOA noted.
Chinese Investors had expected a major stimulus package from the government this week, but were disappointed with the relatively small $1.4 trillion package Beijing produced, with a focus on reducing the debt burden of local government.
“This is not the stimulus that markets were looking for at all. This is not stimulus to begin with. What they’re doing is recycling debt. I don’t think this does anything to stimulate growth,” Shehzad Qazi, managing director of the U.S.-based China Beige Book, told CNBC.
The Chinese government has extended the hand of friendship in an attempt to soften the blow from Trump when he takes office.
“China is willing to strengthen communication, expand cooperation and resolve conflicts with the United States in accordance with the principles of mutual respect, peaceful coexistence, and win-win cooperation,” He Yongqian, spokeswoman for China’s Ministry of Commerce, said.Top of Form
China, the spokeswoman continued, wants to “jointly promote the development of China-US economic and trade relations in a stable, healthy and sustainable direction that would benefit both countries, and the world.”
Other indications suggest that, despite ramping up production, China is having a hard time finding markets for its goods, even at reduced prices.