StanChart’s Ding Sees Further Deceleration of Chinese Economy


U.S. President Donald Trump may like to think that his tariffs are hurting the Chinese economy, but one leading economist said the slowdown in China is actually mostly “self-inflicted.”

“There’s downward pressure on the Chinese economy. A lot of it is self-inflicted due to the so-called deleveraging campaign and the tariffs imposed by the U.S. are re-enforcing that downside but by no means the major source of downward pressure,” Stephen Roach, a senior fellow at Yale University, told CNBC’s Sri Jegarajah on Friday.

The U.S. and China — the two largest economies in the world — are engaged in a tariff fight that began last year. The Trump administration imposed additional tariffs on $250 billion in Chinese imports, while Beijing slapped duties on $110 billion of American goods. Both sides are negotiating a deal to address their differences on issues such a trade imbalance and the alleged forced technology transfers from American firms to their Chinese partners.

Trump last month said “the tariffs are hurting China very badly.” His comment came at a time when Chinese economic growth is slowing down: Beijing said gross domestic product expansion is expected to expand by 6 percent to 6.5 percent this year, down from last year’s official 6.6 percent figure.

President Trump says US, China negotiators are close to ‘real deal’
With Chinese authorities moving to stimulate the economy through tax cuts and monetary policy easing, China’s economy has started to show “some green shoots,” said Roach, who’s a former chairman of Morgan Stanley Asia.

“I think the economy will begin to move up in the second half of this year — somewhere in the 6 percent zone,” the economist said, adding that, meanwhile, “the sugar high is coming off in the U.S.” with multiple quarters of growth deceleration.

‘Superficial deal’
Representatives from the U.S. and China are set to meet in Beijing beginning on March 28 for another round of trade discussion in an attempt to finalize a deal.

Roach said it’s likely that both countries will eventually agree on a deal, but details of the agreement would be “superficial.”

“There’s probably going to be a deal but I think you need to be very careful in assessing the quality of the deal we’re getting. I think the deal will be a superficial deal largely driven by attempts to narrow the bilateral trade imbalance between the U.S. and China,” said Roach.

“But the structural issue in technology and industrial policies, state-owned enterprises, technology transfers – those are much tougher to address and I think the best we’ll get is an agreement to keep talking about them,” he added.

CNBC reported on Thursday that Trump is focused on pushing his negotiators to get China to agree to buy more American goods in order to cut the trade imbalance between the two countries. But the president’s advisors have sought to steer negotiations to long-term structural issues in China to more meaningfully re-balance economic relations between the two nations.