Looser Chinese policy could aggravate US trade hawks

Significance

Consumption contributed more than ever in January-June but fears of weaker exports after the imposition of US-China tariffs from July 6 are exacerbating longstanding fears that reining in corporate debt and industrial pollution too quickly could reduce growth sharply, putting jobs and social stability at risk.

Impacts

• China’s trading partners may transfer orders elsewhere to avoid direct exposure to higher costs, reducing demand for China’s exports.
• Risks will persist throughout Trump's term, and will rise sharply if Washington erodes the authority of the WTO.
• Looser monetary and fiscal policy coinciding with tightening global monetary conditions will pressure the renminbi.