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Shenzhen, China – April 12: The woman checks her smartphone, passing the busy intersection in front of the Sam Club and McDonald’s Restaurant Shop on April 12, 2025 in Shenzhen, China.
Chen Sin | News Getty Images
As high tariffs kill orders for Chinese goods, the country seeks to help exporters redirect sales to the domestic market, which threatens to attract the second largest economy in the world in deeper deflation.
Local Chinese and large enterprises expressed support to help the tariff exporters redirect their products to the domestic market. Jd.com. Favorable And Dyin, the Tiktok sister in China, is among the e-commerce giants that promote the sale of these goods to Chinese consumers.
Shen Tiping, Deputy Minister of Commerce, In statement Last month, he called the huge domestic market of China as the most important buffer for exporters in weathering of external shocks, calling on local authorities to coordinate efforts to stabilize exports and increase consumption.
“A side effect is a fierce price war among Chinese firms,” said Ingke Zhou, Senior Chinese economist at Barclays Bank.
For example, JD.com has promised $ 200 billion ($ 28 billion) to help exporters and created a special section on its goods platform originally designed for US buyers up to 55%.
Zhou said the influx of reduced goods intended for the US market will also destroy the profitability of companies, which in turn weighs the employment, Zhou said. Undefined work prospects And the concerns about the stability of the revenue are already contributing to weak consumer demand.
After 2023 and 2024. Two straight months In February and March. The manufacturer’s pricing index fell on 29 -Y month in a row In March, falling 2.5% compared to a year earlier, four months in four months.
As the trade war beat up export orders, deflation in wholesale prices in China is likely to deepen up to 2.8% in April, in April, with 2.5% in MarchAccording to the team of economists Morgan Stanley. “We believe
For the whole year, Shan Zui, Chinese economist Goldman Sachs, expects that IPC China will fall to 0%, from growth by 0.2% compared to last year in 2024and IPP will decrease by 1.6% from 2.2% drop last year.
“Prices should fall for domestic and other foreign buyers to help absorb excess supply left by US importers,” Shan said, adding that the production potential could not quickly set up on “a sudden tariff, probably worsening overcurrent in some industries.
Goldman pursues a real gross domestic product of China to grow only 4.0% this year, even if the Chinese authorities have set The Growth Purpose for 2025 ” About 5%“
Game for survival
US President Donald Trump this year has strengthened tariffs for imported Chinese goods up to 145% the highest level over the agePushing Beijing to revenge with additional levies in 125%. Tariffs at such non -dimensional levels are strongly involved in trade between the two countries.
Consistent Beijing efforts to help exporters unload the goods affected by the US tariffs may not be anything than the stop, said Shen Meng, Boutique Investment Bank, based in Beijing, Chanson & Co.
The loss of access to the US market deepened the load on Chinese exporters, providing weak domestic demand, strengthening price wars, margins with thin razors, payments delay and high profitability.
“For exporters who have been able to charge higher prices from US consumers, selling in China’s domestic market is just a way to clear undermed inventory and alleviate short-term cash flow,” said Shen: “There is little profit.”
Shen said that the squeezed profitability could force some export companies to close the store and others can work with a loss just to avoid seating factories, Shen said.
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As more firms stop or scale operations, the results are shed on the labor market. Shang Goldman Sachs estimate that 16 million jobs, more than 2% of China’s workforce, are involved in the production of US -related goods.
Trump administration last week ended with the release of “de ministers” This allowed Chinese e -commerce firms like Shane and the topic, sending low -cost parcels to the United States without paying tariffs.
“Deleting de minimis rules and reducing cash flow is pushing numerous small and medium-sized enterprises,” said Van Dan, the Director of Political Consultations at the risk of Eurosia Group, warning that job losses arise in regions related to export levels.
Unemployment estimates have reached an average of 5.7% this year higher than The official goal is 5.5%said Van.
Beijing has a firepower stimulus
Increasing exports over the past few years has helped China offset the dragging of the property that has reached investment and consumer expenses, intense state finance and the banking sector.
Properties of property combined with non-US tariffs means that “the economy should face two major dragging at the same time,” China’s chief economist in Nomura said in a recent note, warning that the risk is “worse than being expected.”
Despite the installation calls for more reliable stimulation, many economists believe that Beijing is probably waiting to see specific signs of economic deterioration before it exercises fiscal fire strength.
“The authorities do not consider deflation as a crisis, instead (they) justify low prices as a buffer to support household savings during the economic transition,” said Van Eurosia Group.
Asked about the potential impact of increased competition in the China market, Professor of the University of Beijing Justin If Lin said that Beijing could use fiscal, monetary and other targeted policy to increase purchasing power.
“The task faced by the United States is greater than in China,” he told reporters on April 21 in Mandarin translated by CNBC. Lin is the Dean of the Institute of the New Structural Economy.
He expects the current tariff situation to be resolved in the near future but does not share certain terms. While China retains production capabilities, Lynn said it would take at least a year to make the United States dress up production, which means that US consumers will suffer from higher prices at this time.
– Evelyn Chen in CNBC contributed to this story.
