Weijian Shan
106 μ¢¤³£ ¬μμ¬
The resilience o the Chinese economy in the face o the trade war
helps explain why Beijing has stiened its negotiating position in
spite o Trump’s escalation.
China hasn’t had a recession in the past 40 years and won’t have
one in the foreseeable future, because its economy is still at an early
stage o development, with per capita ³² only one-sixth o that o
the United States. Due to declining rates o saving and rising wages,
the engine o China’s economy is shifting from investments and
exports to private consumption. As a result, the country’s growth
rate is expected to slow. The Interna-
tional Monetary Fund projects that
China’s real ³² growth will fall from
6.6 percent in 2018 to 5.5 percent in
2024; other estimates put the growth
rate at an even lower number. Al-
though the rate o Chinese growth
may dip, there is little risk that the
Chinese economy will contract in the foreseeable future. Private
consumption, which has been increasing, representing 35 percent o ³²
in 2010 and 39 percent last year, is expected to continue to rise and
to drive economic growth, especially now that China has expanded
its social safety net and welfare provisions, freeing up private savings
for consumption.
The U.S. economy, on the other hand, has had the longest expan-
sion in history, and the inevitable down cycle is already on the horizon:
second-quarter ³² growth this year dropped to 2.0 percent from the
Ärst quarter’s 3.1 percent. The trade war, without taking into account
the escalations from September, will shave o at least hal a percent-
age point o U.S. ³², and that much o a drag on the economy may
tip it into the anticipated downturn. (According to a September
Washington Post poll, 60 percent o Americans expect a recession in
2020.) The prospect o a recession could provide Trump with the im-
petus to call o the trade war. Here, then, is one plausible way the
trade war will come to an end. Americans aren’t uniformly feeling the
pain o the taris yet. But a turning point is likely to come when the
economy starts to lose steam.
I the trade war continues, it will compromise the international
trading system, which relies on a global division o labor based on each
country’s comparative advantage. Once that system becomes lessChinese leaders have long
sought to steer their
economy toward a
consumer-driven model.