Topping the list of threats to China's 6.5 percent growth rate is slowing global demand, too much debt and productivity-killing pollution. Here's a fast-evolving one that deserves more attention: Donald Trump.
That's the upshot of a new analysis from Daiwa Capital Markets, which reckons a Trump White House could slash Chinese shipments to the United States by 87 percent, or about $420 billion. The knock-on effects from a Trump trade war — he's proposed 45 percent tariffs — would be wide, deep and lasting, thrusting gross domestic product down by about 4.8 percent.
Most disturbing about Daiwa economist Kevin Lai's numbers is that they may be too optimistic. The chilling effect from Trump's tariff tantrum on consumption, business confidence and investment flows could be the exogenous China event of which geopolitical observers have long speculated. Such a downward growth domino effect would hit Asia hard. Forecasts from South Korea to Australia would take big hits, and Japan's deflationary nightmare would stretch into a third decade. The U.S., too, would suffer considerable feedback effects from weaker growth and surging goods prices.