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That’s why China has to hope that Donald Trump becomes president again

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That’s why China has to hope that Donald Trump becomes president again

Former US President Donald Trump and Chinese President Xi Jinping on November 9, 2017. Fred Dufour/AFP/Getty Images

China will have a hard time maintaining economic growth of four to five percent in the coming years, economist Eswar Prasad told Nikkei.

Beijing is already intervening to support China’s weakening economy and market collapse.

A Trump presidency could still help China expand its economic and political influence around the world.

This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by an editor.

China is taking steps to support its economy and stock markets, but there are limits to what can be achieved, economist Eswar Prasad said.

Stock markets in China continue to record losses

“There is a limit to how far businesses and households can go if they continue to be pessimistic,” Prasad, a Cornell University professor and former International Monetary Fund official with responsibility for China, said in an interview with the published Monday “Nikkei„.

Stock markets in China and Hong Kong continue to post losses in 2024 after losing trillions of dollars since 2021. Beijing has taken more than a dozen measures since January to stabilize the stock market’s slide and shore up weak demand in the real estate market.

On Wednesday, benchmark stock indexes in China and Hong Kong rose on optimism over Beijing’s increasing support measures. However, they are all still in the red so far this year.

“The Chinese government’s measures to restore private sector confidence and stimulate the economy still lack a broad reform framework,” Prasad said in the interview with Nikkei. He thus supported the assessment of the researchers Rhodium Groupwhich emphasized in a report the need for structural economic reforms.

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Will Xi Jinping save China’s tumbling markets?

Can China continue to grow steadily?

More than a year after lifting lockdowns, China has failed to sustain its growth spurt, shaking investor confidence in the health of the world‘s second-largest economy. The country faces numerous challenges, one of which is: real estate crisis, deflationary pressure and one demographic crisis.

Because of these “vulnerabilities,” China will find it difficult to maintain a growth rate of four to five percent in the coming years, Prasad said.

China has not yet announced its national growth target for this year, but policy insiders have “Reuters“ explains that they expect Beijing to maintain its five percent growth target for this year.

China recorded GDP growth of 5.2 percent in 2023 and exceeding its COVID result of 3 percent in 2022. However, this was still one of the worst results for the economy in three decades.

“The likelihood of predicting that China’s GDP will one day overtake that of the US is decreasing,” Prasad added to Nikkei.

Read too

China is threatened with a “debt deflation spiral” if Xi Jinping does not react

A Trump presidency could help China

While Prasad doesn’t have a rosy outlook for China, he believes the East Asian giant could still gain economic and geopolitical influence if Donald Trump wins a second US presidency.

That’s because Trump is likely to increase trade protectionism, which will lead to fragmentation of the trade and financial sectors, Prasad told Nikkei. On Sunday, Trump said he would impose tariffs of more than 60 percent on Chinese goods if he wins the November presidential election.

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“Trump is likely to become more isolationist upon his return to power,” which would result in the U.S. losing its leadership role in key international organizations and in addressing global issues such as the climate crisis, Prasad said.

“China will once again have the opportunity to strengthen its economic and geopolitical influence in the world, especially in Asia,” he said.

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