Trump destroying China. Arun reports the Trade War as China's GDP hits new Low

The Trend in the last few quarters gives a clear indication that the Chinese growth story is over. For almost 4 decades, the Chinese economy registered a near double-digit growth but now it is not able to sustain the same. The East Asian economic powerhouse posted almost three-decade low growth in June quarter. The impact of Trump’s trade war is clearly visible as many companies are shifting their manufacturing units from China.

                                                      US President Donald.J.Trump

The 6.2 percent GDP growth posted in June quarter is lowest since 1992. The country recorded 6.4 percent growth in the first quarter of this year and 6.6 percent growth for year 2018. The economic growth of China is now supported by domestic demand instead of exports. “China’s economic growth is more and more reliant on domestic demand, especially on consumption,” said Mao Shengyong, NBS spokesman.

US president lauded his trade war policies as the growth of China, which manipulates its currency heavily, fell at 27 year low. “United States tariffs are having a major effect on companies wanting to leave China for non-tariffed countries,” tweeted Trump. “Thousands of companies are leaving.

                                      US -China Trade war shakes the Chinese Economy

                                          

 This is why China wants to make a deal with the US and wishes it had not broken the original deal in the first place,” said Mr Trump. “In the meantime we are receiving billions of dollars in tariffs from China and possibly much more to come,” he added.

Previously, Donald Trump has announced that US will increase the tariffs on 200 billion dollars of Chinese goods to 25 percent from the existing 10 percent. However, Trump is not pleased by the progress on trade talks and this was the reason behind increase in tariffs.

The US has a trade deficit of almost 700 billion dollars of which China accounts for almost half. Imposing import tariffs is rebalancing the trade relations of US with countries like China, Japan, Germany, Mexico and others. Trump is vehemently opposed to the current trade relations between America and China because they are heavily skewed in favor of China.

 In 2016, China was the largest goods trading partner with 578.2 billion dollars in total (two way) goods trade during 2016. Goods exports totaled 115.6 billion dollars; goods imports totaled 462.6 billion dollars. The U.S. goods trade deficit with China was 347.0 billion dollars in 2016. Trump was opposed to the fact that the Asian economy deliberately keeps the value of its currency low, therefore, making its exports more competitive in the international market. The American manufacturers were losing to the Chinese because the labor was cheap there, and goods produced in America have become uncompetitive.

India - the sole beneficiary :

         The biggest beneficiary is India. With their new way of attracting FDIs a great success it will get the maximum benefit from the ongoing trade war between US-China. And Indian Prime Minister Narendra Modi won't miss this big opportunity which he was waiting for. He is known for his aggressive stands on several issues and clearly showing his stand "India First". We've already heard of the news about 350 Manufacturing based multinationals are shifting their production base to India. This is a big sign of what to come next.

                                    India is the Biggest Beneficiary of US-China Trade War

The escalating trade war between the US and China is an "opportune time" for India to attract the large MNCs looking for alternative locations outside China. This is also a great time for India to begin attracting the large multinationals that are now looking for alternative locations. Their wages have gone up and the trade war with the US has begun to close the access of the multinationals into the US market in a big way.

Credits: Rightlog.in, Washington Post, Forbes.