How Is China's Economy Responding to Tariffs and Trade Disruptions?

CGTN Europe spoke to Dr. Yan Liang, Chair Professor of Economics at Willamette University, about country's latest import and export numbers.

Transcript

00:00Let's get more on this now with Yan Liang, who's a professor of economics at Willamette University.

00:04Thank you very much indeed for joining us. Welcome back to the program.

00:07So, China's imports and exports weakened over the January to February period.

00:12What's your reading of these numbers?

00:15Yeah, good to talk to you, Paul. So, according to China's customs, there are some seasonal

00:20factors. So, for example, this February and January, this year is a spring festival.

00:25It was extended by two days. So, that means these two months lost two working days. And so,

00:31according to them, if we account for all these other factors, you're actually not seeing a

00:36decline in the total trade. In the yuan value, the trade actually has gone up by, I think, 1.7%

00:44year on year. But I think the other major factor has to do with, as you just reported,

00:50that there has been a front-loading of goods from China by the importers of other countries

00:57in anticipation of the tariffs. So, that's why you saw that last December,

01:03exports had gone out by 10.7%, quite a remarkable surge. And so, I think that kind of effect has

01:10faded out a little bit in the first two months of this year. So, Donald Trump's tariff kicked in

01:16on February 4th, and then the second tier of the 10% just started March 4th. So, I think we'll see

01:22more of that tariff effect probably in March and April and going forward. And what else can the

01:30government do to respond to this? What policy measures can be put in place to limit the damage

01:35from tariffs? Well, that's a great question. So, I think, first of all, it needs to be noted that

01:42the US market is becoming a smaller and smaller destination for China's exports. As a matter of

01:49fact, the ASEAN countries, European countries are the top two export destinations for China. So,

01:56the direct exposure of China's exports to the US is only 14.6% last year. Now, that said, I think

02:03without a free trade between the US and China with this higher tariff barriers, it is going to

02:10hurt China's exports. That's why I think at the two sessions that is closing in Beijing, you see

02:17the slew of government policies to bolster domestic consumption demand and investment returns

02:23through proactive fiscal policies and monetary policies to support domestic consumption

02:28and to strengthen business interest and confidence. So, I think all of these factors

02:33are basically saying that China needs to look more towards domestic market to compensate for

02:39maybe some of the loss in the trade front. But again, I think there are many ways that China is

02:43able to export to these other countries, ASEAN countries, you know, like Vietnam or Mexico.

02:50And so, I don't think that at the trade front, China is going to take a very large hit as some

02:56of the sort of the analysts would like, you know, would make it to be. Okay, well, thank you so much

03:03for your insights on this, Professor Yan Liang from Willamette University.