Tariff Hikes and China's Resilience: Can the Dragon Dance Around External Shocks?
Friday, Nov 22, 2024 2:47 am ET
4min read Tariff hikes, the latest geopolitical dance move, have the potential to disrupt global trade dynamics. However, China, the world's second-largest economy, is demonstrating its resilience and strategic agility in managing these 'external shocks.' A senior official has asserted that China can navigate these challenges, and this article explores how the dragon can dance around tariff hikes.
China's recent tariff adjustments, including reductions on 1,010 goods and increases on certain commodities, aim to support high-quality development and promote opening-up. Despite potential hikes, Li Yong, a senior research fellow at the China Association of International Trade, believes that China can manage 'external shocks' by fostering innovation and opening-up. He states, "The adjustments demonstrate China's continued actions in promoting high-quality opening-up, which are in sharp contrast with some countries and regions that have purposely increased tariffs targeting trade with China or utilized tariffs against China."
Tariff hikes could lead to retaliatory measures from trading partners, potentially straining relations. However, China's strategic partnerships and trade agreements can help mitigate tariff hikes' impacts. By leveraging these agreements, China can expand markets, negotiate favorable terms, promote regional integration, and support least-developed countries. This balanced approach allows China to navigate 'external shocks' and ensure continued economic growth despite tariff hikes.
As China's domestic industry adapts to tariff hikes, innovation plays a crucial role in its ability to manage these challenges. The 2024 Tariff Adjustment Plan will increase import duties on certain commodities, such as ethylene, propylene, and liquid crystal glass substrates, to support domestic industry and address supply and demand imbalances. However, this will also encourage Chinese firms to innovate and develop alternative technologies or sources. For instance, the tariff waivers on key medical goods and raw materials for rare diseases will stimulate domestic production and reduce reliance on imports. Additionally, the reduction of import tariffs on resources in short supply, critical equipment, and key parts will facilitate the development of strategic emerging industries.
In conclusion, China's ability to manage 'external shocks' like tariff hikes is bolstered by its commitment to fostering innovation and opening-up. By leveraging its strategic partnerships and trade agreements, China can maintain its competitive position in the global market and mitigate the potential repercussions of tariff hikes on its trade relations. The dragon can indeed dance around external shocks, as long as it remains agile, adaptable, and focused on long-term growth and sustainability.
China's recent tariff adjustments, including reductions on 1,010 goods and increases on certain commodities, aim to support high-quality development and promote opening-up. Despite potential hikes, Li Yong, a senior research fellow at the China Association of International Trade, believes that China can manage 'external shocks' by fostering innovation and opening-up. He states, "The adjustments demonstrate China's continued actions in promoting high-quality opening-up, which are in sharp contrast with some countries and regions that have purposely increased tariffs targeting trade with China or utilized tariffs against China."
Tariff hikes could lead to retaliatory measures from trading partners, potentially straining relations. However, China's strategic partnerships and trade agreements can help mitigate tariff hikes' impacts. By leveraging these agreements, China can expand markets, negotiate favorable terms, promote regional integration, and support least-developed countries. This balanced approach allows China to navigate 'external shocks' and ensure continued economic growth despite tariff hikes.
As China's domestic industry adapts to tariff hikes, innovation plays a crucial role in its ability to manage these challenges. The 2024 Tariff Adjustment Plan will increase import duties on certain commodities, such as ethylene, propylene, and liquid crystal glass substrates, to support domestic industry and address supply and demand imbalances. However, this will also encourage Chinese firms to innovate and develop alternative technologies or sources. For instance, the tariff waivers on key medical goods and raw materials for rare diseases will stimulate domestic production and reduce reliance on imports. Additionally, the reduction of import tariffs on resources in short supply, critical equipment, and key parts will facilitate the development of strategic emerging industries.
In conclusion, China's ability to manage 'external shocks' like tariff hikes is bolstered by its commitment to fostering innovation and opening-up. By leveraging its strategic partnerships and trade agreements, China can maintain its competitive position in the global market and mitigate the potential repercussions of tariff hikes on its trade relations. The dragon can indeed dance around external shocks, as long as it remains agile, adaptable, and focused on long-term growth and sustainability.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.