Is Chinese economy in jeopardy with D. Trump as new President?

As Donald Trump stepped ahead Hilary Clinton to become the next US President, an uncertainty crisis has spread all over the world concerning the consequences of this result. Many Americans already started marching in the streets of California, Oregon and Washington chanting « YOU ARE NOT MY PRESIDENT ! », to protest against the 2016 election’s results.

The economy also took a big hit. After the results showed that Trump was getting closer to 270 votes, stock markets started to fall, especially in Japan and Korea.

The KOSDAQ trading board index and the benchmark Korea Composite Stock Price Index respectively fell by 3.92% and 2.25% and major Japanese companies such as Nintendo and Sony saw their stocks plunge by more than 5%. This is notably due to the protectionist part of the Trump campaign program which would result in the cessation of trade agreements such as the one signed between US and Korea in 2012 and acknowledged as a « disaster » by D. Trump.

 

But what about China?

 

Chinese representatives felt their trust in the US gradually vanish into thin air for years now. Some events such as the wars in Iraq and Afghanistan, 2008 financial crisis and recently, the presidential campaign’s scandals didn’t leave a good impression for Chinese Government.

However, the view on Donald Trump is not similar than other countries. Indeed, Trump is famous for being a businessman which is a well-respected quality in China.

Furthermore, if his 4-year-mandate ends up with good results, it may help the US government regain some credibility towards China. However, Trump’s critics towards China didn’t go unnoticed even though he stipulated that he’s still interested in developing a productive relationship with the country. Nonetheless China fear for its economy, especially on its export activity. After, Trump declared that he would increase by 45% the import taxes on all Chinese goods, the government in Beijing began to take actions. The protectionist aspect of Trump’s campaign led China to quickly react and adjust in order to smooth economic consequences of Trump’s election (Shanghai Composite only fell by 0.61%), and states that it is now ready for any political decisions taken by the US Government.

On another side, Trump’s protectionism also represents a great opportunity for China. Indeed, Trump’s political plan also includes putting a term on the military support for Japan and Korea if they refused to contribute more. By doing so, US’s influence in Asia would dramatically decrease and would allow China to get closer to Taiwan and the South China Sea. By increasing its influence over the Asian continent, countries such as Thailand, Philippine or Malaysia, will more easily consider relying on China, as their best strategic interests.
China is therefore in a state of unknown concerning its future growth. The situation can turn out in their advantage or against them, eitherway you can expect China to pay close attention to future decisions taken by the 45th president as will also the rest of the world.

To be followed!

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