Here is why economists only have one hand ("on one hand..."): they're not versed in social science! No dictatorship will ever "shift to consumers" because doing so would destroy their power base by emancipating their subjects! Authoritarianism requires autarky! Goldman (GS) Says Trump Tariffs Could Shift China’s Focus to Consumer - Bloomberg

Goldman Says Trump Tariffs Could Shift China’s Focus to Consumer

By Bloomberg News
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2:22

Higher US tariffs on Chinese goods could dent growth but also force a long-awaited shift to the consumer in the world’s second-largest economy, according to economists at Goldman Sachs Group Inc.

In the event of higher levies, Beijing would be forced to step up fiscal support to further bolster domestic demand, analysts led by Xinquan Chen said in a research note Friday. They said that the wave of government stimulus this year — which includes a household appliances trade-in program and real estate support — is already set to shift growth next year inward.

“If Chinese goods face higher US tariffs next year, this would accentuate the shift towards domestic demand,” the researchers wrote.

Analysts and investors increasingly see Chinese officials pivoting more to consumption only if the trade picture weakens further. Veteran Asia investor Weijian Shan, executive chairman of PAG, also said a tough external environment would spur officials to prioritize greater consumption to drive economic growth.

China has identified shrinking demand as a key challenge since 2021 and repeatedly vowed to promote consumption at gatherings of the Politburo, a body comprising China’s top officials. Many economists — including policy advisers and those working at private institutions — have proposed cash handouts for families to boost spending over the past few years but so far Beijing shows no sign of taking that advice.

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Organizations including the International Monetary Fund have also called for economic rebalancing in China away from such a heavy reliance on investment and trade. The US has joined the chorus, criticizing oversupply in the Chinese economy. For Beijing, rising hostility from the US and measures to limit China in key technologies have only bolstered President Xi Jinping’s determination to prioritize tech self-reliance and the manufacturing sector.

US voters head to the polls Tuesday in what’s shaping up to be a tossup between Donald Trump and Kamala Harris. The former president said he might impose a tariff on Chinese goods of more than 60% if elected.

The Goldman analysts assume a 20% tariff on Chinese goods if Trump wins the presidency, shrinking the Asian nation’s gross domestic product by 0.7 percentage points and hitting capital formation and exports. In that case, they also expect China to tolerate a weaker yuan to mitigate the hit, expand the household goods and equipment replacement programs, and provide targeted cash handouts to some households.

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2:15

Macau’s gaming revenue jumped 6.6% in October, rising to a new high since Covid shut down travel as China’s national Golden Week holiday fueled tourism and spending.

Gross gaming revenue reached 20.8 billion patacas ($2.6 billion) for the month, according to data released by the Gaming Inspection and Coordination Bureau on Friday. The result was in line with the median analyst estimate of a 6% year-on-year increase.

The tally is a 20% increase from the previous month but remains 21% below the pre-pandemic level in 2019.

Key Insights

  • Macau saw a surge in visitors during China’s seven-day holiday at the beginning of the month, with average daily tourist arrivals exceeding pre-Covid levels in 2019, reaching almost 142,000. Most of Macau’s visitors came from the mainland.
    • Gaming revenue was further boosted by concerts of Hong Kong and Korean pop stars in the final week of October.

    Market Performance

    • The Bloomberg Intelligence index of Macau casino operators fell 11.4% in October, while the benchmark Hang Seng Index was down 3.9%.

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