China Can Weather Trade Storm, But Needs Technology

GREENWOOD VILLAGE, CO – Winning a trade war with China requires an understanding of how the current dispute affects the country. That’s according to a recent report from CoBank that explains China’s faltering economic expansion has been an ongoing concern for economists and world financial markets for the past ten years. Yet in recent months, amid a persistent trade dispute with the United States, questions about the outlook for China have taken on increasing urgency. Dr. Mary Lovely is a professor of economics at Syracuse University and says that China’s slower expansion today is an inevitable result of the nation’s more explosive growth in years past, which made its economy too large to continue growing at such a breakneck pace. Yet the Chinese economy continues to grow, she says, and the country’s middle class continues to do well. Currently, the economy is likely growing somewhere between 5 and 6 percent she said, which is considerably slower than in recent years. “China is now an upper-middle-income country (and) when you’re at that level, you can’t get the 10% growth China had become used to.” Since services now account for more than half the Chinese economy, and Americans don’t tend to buy services from China, the trade war is not having a deep effect on that country. Even the effect of U.S. tariffs on Chinese manufacturing exports is somewhat limited and the economic risks China really faces in its conflict has “less to do with tariffs and more to do with their ongoing access to Western technology.”