MNI POLICY: U.S. Hiking Tariffs Will Hurt China's GDP By 0.3pp

     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. 

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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