From CNBC: 2024-11-06 21:45:16

Aly Song | Reuters

Donald Trump’s 2024 victory prompts China to plan larger fiscal stimulus measures, anticipating potential tariffs of 60% on Chinese goods. China relies on exports amid economic challenges. Trump’s policies could reduce China’s exports by $200 billion, impacting GDP growth. Chinese authorities are expected to approve additional fiscal stimulus to counter potential shocks.

Stock markets in China and Hong Kong fell as Trump’s victory became apparent, while U.S. stocks surged to record highs. Chinese stocks tried to hold mild gains on Thursday. The divergence in stock performance suggests China’s stimulus may exceed expectations. Uncertainties around Trump’s actions may limit the level of support provided by Beijing.

The U.S. imposed restrictions on Chinese tech companies, including Huawei, during Trump’s presidency. Both Democrats and Republicans supported these measures and sought to boost semiconductor manufacturing in the U.S. China responded by encouraging high-end manufacturing domestically. The outcome of the U.S. election could impact trade policies and global economy.

The trade deficit with China narrowed to $279.11 billion in 2023 compared to $346.83 billion in 2016. A 10% tariff increase on Chinese exports could reduce China’s GDP growth. China’s exports to the U.S. fell by 14% in 2023, but annual imports from the U.S. increased. Beijing may adopt a conservative approach to stimulus in the face of uncertainties.

China remains a dominant exporter globally, with the U.S. accounting for less than 15% of Chinese exports in 2023. China’s export destinations have diversified, gaining market share in other regions. Despite potential tariffs, China’s exports have grown to countries trading with the U.S. China’s influence in global trade continues to expand.

Read more: Trump win and threat of more tariffs raises expectations for more China stimulus