China risks a deeper shrinkage by converting exports to the local market

When the high definitions in the sky were killed by the United States’ orders of Chinese goods, the country was striving to help exporters convert sales to the local market-a step threatening to pay the second largest economy in the world to a deeper shrinkage.

Chinese governments and major companies have expressed support to help redirect their products to the local market for sale. JD.comand Tinetnet And Douyin, the brotherly Tiktok app in China, is among the e -commerce giants that promote these goods to Chinese consumers.

Shang Qiucing, Deputy Minister of Commerce, in A. statement Last month, the wide Chinese local market described a decisive insulation for exporters in the resurrection of external shocks, and urged local authorities to coordinate efforts to stabilize exports and enhance consumption.

“This side effect is a fierce price war between Chinese companies,” said Yingki Chu, Chinese chief economist at Barclays Bank.

For example, JD.com has pledged 200 billion yuan ($ 28 billion) to help exporters and created a section designated on its platform for goods originally designated for American buyers, with discounts of up to 55 %.

Zhou said that the flow of reduced goods for the American market will also lead to corporate profitability, which in turn will be burdened to work. Job prospects are unconfirmed Fears of instability of income actually contribute to weak demand for consumers.

After hovering over zero in 2023 and 2024, the consumer price index slipped into a negative area, and decreased Two consecutive months In February and March. Product price index decreased Month 29 in a row In March, a decrease of 2.5 % from the previous year, to record its sharp decrease in four months.

As the trade war reduces export orders, it is possible that the contraction in wholesale prices in China is 2.8 % in April, From 2.5 % in MarchAccording to a team of economists in Morgan Stanley. “We believe that the impact of the customs tariff will be the most severe in this quarter, as many exporters stopped their production and shipments to the United States.”

For the whole year, Shaw Hoy, China’s Senior Economist in Goldman Sachs, expects that the Chinese consumer price index will decrease to 0 %, from 0.2 % growth year in 2024And PPI to decrease 1.6 % From a decrease in 2.2 % last year.

“Prices will need to decline for local buyers and other foreign buyers to help absorb the excessive offer left by importers by the United States,” Chan said.

Goldman shows the real GDP of China for only 4.0 % growth this year, even with the position of Chinese authorities The goal of growth for 2025 in “about 5 %“

US President Donald Trump rose the customs tariff for imported Chinese goods to 145 % this year, The highest level in a centuryThis prompted Beijing to take revenge with the additional fees by 125 %. Definitions are identified on these exorbitant levels of intense trade between the two countries.

Shin Meng, the director of the Beijing Investment Investment Bank, said that the concerted efforts from Beijing to help exporters cancel the goods that are affected by the American definitions more than just a stop.

The loss of access to the American market has led to the depth of the dynasties on the Chinese exporters, as they accumulate on twice the local demand, intensifying price wars, delicate margins, delaying payment, and high return rates.

“For exporters who were able to impose higher fees than American consumers, selling in the local market in China is just a way to rid the indirect inventory and relieve short -term cash flow pressure,” there is no big room for profits. “

Shin said that the clicked margins may force some exporting companies to close the store, while others may choose to work at a confusion, just to prevent factories from sitting inactivity.

With more companies closing or expanding the scope of rear operations, repercussions will enter the labor market. Shan Goldman Sachs estimates that 16 million jobs are more than 2 % of the workforce in China, participating in the production of goods associated with the United States.

Trump administration last week End the “de minimis” exemptions This allowed Chinese e -commerce companies such as Shin and Timo to charge low -value parcels to the United States without paying a tariff.

“Remove the minimum base and the decline in cash flow pushing many small and medium enterprises towards insolvency,” said Wang Dan, director of the Eurasia Group company at Eurasia Group, warning that job losses are escalating in export -dependent areas.

The urban unemployment rate is estimated to reach 5.7 % on average this year, higher than Official 5.5 % goalWang said.