ICS Analysis

A Componential Analysis of the Impact of a Trade War on China’s Economic Growth

China and the USA are currently embroiled in an acrimonious geo-economic tussle. Accusing China of eroding its industrial base and perpetrating “economic aggression” towards the US in the form of technology theft and economic espionage, President Trump levied two tranches of tariffs on imports from China valued at USD 250 billion. A third tranche on USD 267 billion worth of imports, which would effectively involve all Chinese imports, will come into effect should the two sides fail to reach an agreement within the 90 day pause negotiated during the G20 summit at Buenos Aires in December, 2018. Observers still consider it likely that the tussle could develop into a protracted economic conflict. What impact a trade war will have on China’s economy is a contentious issue which bitterly divides observers. This paper performs an evaluation of the impact of these contestations on the main components of China’s economic growth across the short and long run. 

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