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BEIJING (MNI) - Escalating trade conflicts between China and the U.S. will
have only a small impact on the Chinese economy because the real economy and
capital markets have become more resilient to external shocks, according to a
report in the Financial News. The newspaper, which is operated by the People's
Bank of China, says that a combination of hiking US tariffs on $200 billion of
Chinese exports from 10% to 25% and Chinese counter measures would dampen
China's GDP by about 0.3 percentage points. Citing Ma Jun, a member of the
central bank's Monetary Policy Committee, Financial News says that the negative
impact of the tariff hikes is controllable. Ma said the Chinese economy had
improved significantly in recent months and he pointed to improved PMI data, a
series of supporting policies to ease the financing difficulties of private
enterprises and tax cuts larger than those in the U.S. The recent introduction
of more proactive fiscal policies and the improved monetary conditions would
kick in and have an impact on the economy in the coming quarters. Ma said he
believed this would strengthen the resilience of the capital markets in the face
of any new external headwinds. The stock market slumped last year because
investors could not judge the real impact of the trade friction, Ma said, adding
that market sentiment was also soured by the economic slowdown and the excessive
contraction of shadow banking. On Friday, China's Ministry of Commerce confirmed
that China would take countermeasures in response to the U.S. tariff hikes on
$200 billion of Chinese exports.
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