China’s reliance on exports presents a potential pitfall for economic growth this year as uncertainties multiply over trade conflicts with the US and Europe, analysts said at a forum held at Renmin University of China in Beijing on Wednesday.
China’s exports rose by 7.6 per cent from a year earlier to US$302.4 billion in May, the highest monthly export value since September.
“Dependence on external demand poses a risk to economic growth in the second half of the year,” said Ding Shuang, chief Greater China economist at Standard Chartered Bank and a speaker at the forum.
Shan Hui, chief China economist at Goldman Sachs, estimated that 2.4 percentage points of the country’s first-quarter GDP growth came from exports. “In other words,” she said, “if there hadn’t been outstanding performance on the export side, the contribution of domestic demand was just three percentage points.”
01:52
US proposes new round of tariffs on China in latest trade war escalation
US proposes new round of tariffs on China in latest trade war escalation
“The trade friction between China and Europe may spread beyond new energy vehicles,” Ding said.
As to what will happen at the end of that interval, Ding said it would depend “on further negotiations”, adding any question over a potential increase in tariffs is one of “magnitude”.
Shan said those tariffs’ impact on China’s economy this year would be limited, as the covered goods make up a relatively small proportion of the country’s overall exports.
Zu Baoliang, chief economist and researcher at the National Information Center – a think tank affiliated with the National Development and Reform Commission, China’s top economic planner – said lessons can be taken from Japan’s experience handling trade conflicts with the West.
The US and Japan had a series of trade disputes from the 1950s to the 1990s. During that time, both countries agreed to set a limit on the export volume of certain Japanese goods – a measure Zu said China can also examine.