In the context of economic globalization, effects of bilateral-based tariff and trade agreement often tends to be limited. An article by Gao Shanwen on the impact of China-US #tradewar on #Chinese real economy: cf40.org.cn/uploads/newsle…
Despite trade tension, share of #Chinese exports in global trade has remained stable since beginning of this year. While re-export trade and substitution effect are reasons behind this, the influence of exchange rate should not be ignored either.
The depreciation of RMB exchange rate caused by trade war has largely spread the impact of trade war on Chinese exports to other economies around the world, making China's share of global trade stable.
It has been found that trade war not only has significant impact on investment activities in industries with high trade dependence,but also on foreign investment in China &China's overseas investment. A possible path that the trade war impacts the real economy could be as follow:
The outbreak of China-US trade war causes pessimistic expectation on global economy,contraction in economic activity,weakness in external demand and thus shock to Chinese exports. Uncertainty brought by trade war discourages investment in industries with high dependence on trade.
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