Although China remains the world’s number two economy and even though the country remains the monster of emerging markets, China is still losing the trade war in nearly every way possible. In the first nonseasonal decline since October 2016, exports from China to the US fell to 3.7%. In December when exports fell even more than expected, it signaled more suffering ahead will begin being measured by the markets from the trade war fallout.
Beginning last month in Canada with CFO of Huawei Meng Wanzhou getting arrested for breaking US sanctions law which was then followed last week by sales executive Wang Weijingbeing fired in Poland combine to show that China is exactly as Washington believes – bad at acting. Spying allegations centered around the Poland story with trade secrets being allegedly sought from the government.
China tech companies may have received theirprominent distinction by using joint venture deals to copy foreign technologies as well as by using corporate espionage and intellectual property theft according to the latest bad headlines from Huawei. Huawei, it seems, has stooped to white-collar criminal actions even though is one of China’s most important private technology firms. Cisco Systems is their worldwide rival.
China getting beat in the trade war on the public relations front is in part due to Huawei. However, early in the trade war, China had thought since Europeans hate Trump the same as they do, they would become allies. Nonetheless, the EU was not wooed by China. In fact, it seems only Turkey is doing worse, with the Shanghai Composite down in the twelve months by around thirty percent.
Looking at economic data, investors already know that the stock market is not the best way to measure growth in China. Even though industrial production is in decline, it is still positive, which is more than can be said for the quarterly GDP growth which is also in decline. Additional, China released information for the month of December showingweak exports data as well.
These trade numbers which China released today really had “alarm bells ringing” according to a Think Markets chief market strategist and repeat Forbes contributor. He says one needs to look no further than the trade in China to find evidence of how the trade war is impacting the country’s economic health (Rapoza, 2019).
Furthermore, it doesn’t take a mathematician to figure out that lower export numbers equallower jobs available and yet another direct impact on the economy in China. The chief market strategist forbes.com that Trump “can be pleased” that he has brought China “to its knees”. Because the day’s export growth data is suggested to be short-lived, if the economy continues to worsen, as predicted, Xi may become more eager to strike a trade deal with America.
Economists in Hong Kong believe China needs to take a more aggressiveapproach in order to stabilize growth. Instead, they believe China’s growth will continue to worsen over the next half year. However, China plays the long game, and unless unemployment plummets out of control and the economy tanks, Xi will be able to take a little pain. After all, he’ll most likely be around long after Trump.