In a report by CNBC on September 6, an expert from Washington-based think thank, Center for Strategic and International Studies, said that China’s economy, the world’s second-largest, is “pretty stable”. Therefore, the country does not have to make “monster compromises” to the U.S in the trade war anytime soon.
That is contrary to the prediction of several market analysts. According to them, China’s economy will take a bigger hit due to increased tariffs. They believed that over the long term, the country might have a lot more to lose due to its greater reliance on exports.
However, Scott Kennedy, senior advisor of the Freeman Chair in China Studies and director of the Project on Chinese Business and Political Economy at CSIS, said that China has stood firm and proven that it could bear up against the trade war’s challenges.
Kennedy said that other than the U.S., China has other trading partners that can still spark its economy. He also added that China has managed to solve problems, including increasing levels of debt, even before the trade war escalated last year. This has helped China to still show economic stability.
“So, that economic situation that China’s in right now is relatively good. It means they’re in no hurry to make monster compromises to address American needs,” Kennedy said. “Of course, looking at the U.S. economy, it’s in a parallel type situation, which leaves both sides to hunker down.”
In a surprising turnaround, China and the U.S. have agreed to cooperate and champion practical actions. The two will return to the negotiating table in early October. Both countries have promised to create favorable conditions. Former U.S. Commerce Secretary Carlos Gutierrez said it’s “a bit optimistic” to expect any breakthrough in those talks.
