Economists raise red flags on China’s economic trajectory
East Asia Econ, a research service specialized in the markets and Macro in China, Japan, Korea and Taiwan, commented on recent Chinese figures. In response to Caixin Services PMI, the forum said:
“In Caixin services, the PMI, like the official version, both data and anecdotes are weak. Staffing levels were reduced in June … the new order was associated with a slowdown in concerns and concerns over costs, and intensive market competition, the fastest cut prices since April 2022.”
East Asia Ekon’s inflation of June and manufacturer price number of June was not better. Research firm said:
“The deflation is deep, which is widespread-based for PPI. The core CPI is more stable, but it is partially due to the increase in” other “prices. The headline CPI is low on food prices, which have started falling again.”
Deflation reflects low demand, underlining the need for Beijing to address labor market issues to promote consumption. However, American tariff benefits on Chinese goods can affect margins, labor market status and consumer spirit.
Analysts estimate B30% to 60% US tariffs on Chinese goods
The United Overseas Bank has allegedly expected to settle the US-China tariff rate between 30% and 60%. CN Wire said:
“They estimate that the final US tariff rate on Chinese imports may be between 30% and 60%. There is a possibility of reducing the risk of breakdown in communication channels installed between the two countries. The anticipated deal will include a commitment to reduce its business surplus with importers from China and address export control issues.”
The US-China trade talks may resume in August, US Commerce Secretary Howard Lutnik reportedly stated that an American delegation would be to hold counseling on business issues with Chinese authorities. Trade negotiations may be important as the US administration targets the demand for Chinese goods by implementing punitive levy on transmission from Asia.
Charges of 30–60% tariff on Chinese imports, US Levy as well as levy Beijing’s 2025 development can reduce ambitions. This week, the US introduced a 32% tariff on Indonesia after the US started a 40% tariff on transmission from Vietnam, indicating a possible American proxy business war with China.
China’s exports to the US declined by 43% year-on-year in May, while the total exports increased by 4.8%. In particular, Chinese exports to Indonesia and Vietnam increased by 25% and 30% (YOY) respectively, suggesting us to dodge tariffs.
Mainlands in advance despite economic headwind
Despite the rising tariff concerns, the hopes of success in business talks and policy support raise the investor spirit in the mainland markets. The CSI 300 and the Shanghai Composite Index are 1.41% and 1.4% in July respectively.
Conversely, the Hang Seng index is 0.72% below as investors lock in profits from the first half of 2025. Year-by-Tarikh (YTD), Hang Seng Index is 19.14%, while CSI 300 and Shanghai Composite Index Trail, with YTD with 1.44% and 4.22% respectively. The NASDAQ composite index performs better than Chinese indices in YTD performance, climbing 6.73%.
