New Delhi: US President Donald Trump has imposed heavy tariffs i.e. taxes on China. Its effect is now visible. China may be showing courage, but problems are increasing. China's economy has not yet fully recovered from Corona. Domestic demand is low and the property crisis is also deepening. In such a situation, Trump's tax has put China in more trouble.
On the other hand, after the terrorist attack in Pahalgam, relations between India and Pakistan have deteriorated a lot. The situation seems to be reaching war between the two countries. It is believed that if there is a war between India and Pakistan, China can support Pakistan. This is because the relations between these two countries are very close. However, if China does this, it will dig a hole for itself.
Exaggerating things
Chinese leaders are downplaying the impact of Trump's trade war. They say that they have ways to save jobs and reduce the losses. Senior officials of different ministries are talking about helping companies and unemployed people. They are talking about bringing easy loans and other policies. This can reduce the impact of up to 145% tax imposed on China. This information has been given by AP.
What is the impact on China?
The impact of Trump's tax has started showing on China's economy. This is now clearly visible. Factory activities in China decreased in April. The government has blamed the changes in the global economy for this. According to the National Bureau of Statistics (NBS), the Purchasing Managers Index (PMI) fell to 49 in April. This is below 50. PMI is an important measure of industrial production.
Senior executives of commodities trading house Mercuria told the Financial Times that China's copper reserves will be exhausted in a few months. This is because the market has been severely depleted due to the fear of US tax.
A source from a pharmaceutical company told Reuters that officials are contacting companies privately. They are telling them about the list of products that will not be taxed. This company sells medicines made in America.
What did the experts say?
Zichun Huang, China economist at Capital Economics, said, 'China's economy is under pressure due to low external demand. The government is increasing financial support, but this will not completely reduce the damage. We expect the economy to grow only by 3.5 percent this year.'
Economists at ANZ Research say that large manufacturers will suffer more than small manufacturers. Because small manufacturers require more labor and China has an advantage in this. He said in a report that China's manufacturing cost for light industries can be one-fifth of that of the US. This is unlikely to change.
Caixin Insight Group Senior Economist Wang Zhe wrote, 'Overall, the expansion in supply and demand slowed down in April. Exports decreased and employment also decreased slightly. Manufacturers tried to reduce stocks, there were delays in logistics and there was pressure on prices. Market confidence weakened significantly.'
If Pakistan is supported...
If there is a war between India and Pakistan and China supports Pakistan in this, then the economic condition of the dragon can worsen further. For China, which is already hurt by tariffs, supporting Pakistan can bring it to its knees. This can further worsen China's economy.
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