After Trump’s tariffs, analysts hope China stays calm

Container_shipEconomic commentators were hoping for a measured response from Beijing after US president Donald Trump imposed new tariffs on imports. Trump signed an executive memorandum that would impose tariffs on some $50 billion of Chinese imports – the latest in a series of moves aiming to penalise Chinese exporters and bolster domestic industry. “Will China retaliate? The answer is yes, in their own way. They definitely have the means to do it,” said Fabrice Jacob, chief executive of Hong Kong-based JK Capital Management. Jacob said Beijing could tell Chinese industrialists and consumers to stop buying American products. With state control of national media, such a campaign might be effective. However, Jacob argued China would take a more subtle approach and attempt to negotiate privately with the US. Aidan Yao, an economist, and Shirley Shen, a research assistant, both at Axa Investment Managers, said China had showed significant restraint so far. “However, Beijing does not want to show weakness of succumbing to Trump’s ever-rising demand, so some small-scale of retaliations […] will likely be enacted. Nevertheless, we think China, in general, will respond by offering more ‘carrots’ and ‘stick’,” they said. ©2018 funds global asia

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