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.

Just something to consider if you have confidence that the billionaire-turned-politician understands economics. Here’s a guy, remember, who thinks the remedy for a jobless rate he claims is 50 percent is Federal Reserve rate hikes. Or that renegotiating terms on U.S. bonds wouldn’t be a default. Or that Trump’s advisors talk gibberish. Case in point: Michael Flynn bashing President Barack Obama’s “Trans-Pacific trade agreement with China,” a pact to which Beijing is most definitely not a party.

But Trump’s assault on the world’s factory floor is foreign policy suicide on two levels. One, China holds more than $1.2 trillion of the debt with which Trump thinks he can horse trade. Two, the feedback effects on America. “Hence, it’s really a chicken-and-egg question,” says Lai.

The first risk is easier to explain. Historically loose Fed policies are transmitting waves of cash China’s way. Beijing recycles the savings of 1.4 billion people into dollars, helping Washington live beyond its means. With one announcement, Beijing could tank the dollar and drive up borrowing costs. China unwinding its Treasuries could instigate a fire sale, sending bond, stock and currency markets and corporate executives reeling. Trump, and by extension the U.S. government, would probably take the blame.

The second — shoulder-checking GDP — would make taxing Chinese exports a pyrrhic victory at best. What would Walmart, second only to Exxon Mobil in revenues, and its 1.5 million U.S. employees do? “These tariffs would certainly be detrimental for China, as they would for multinational companies operating in China,” Lai says. “These companies would probably have to make plans to relocate to other countries. China would find itself losing to many other developing economies that were not being targeted by Trump.”

Massive job losses in China could catalyze the kind of social instability that keeps President Xi Jinping awake at night. It also could unsettle Beijing’s balance of payments position and imperil its current account surplus. While Trump covets that outcome, its effect on foreign direct investment flows, which might see massive repatriation, would exacerbate Beijing’s capital account deficit, depressing the yuan. A weaker exchange rate — an irony seemingly lost on Trump — could lead to waves of defaults on dollar loans.

Trump economic adviser Peter Navarro did a documentary called “Death By China.” What about economic suicide? If Trump’s policies were implemented, they’re likely to knock 5 percent off gross domestic product and risk widening the budget deficit over time, according to Oxford Economics.

And then there’s how Xi might retaliate against corporate America. If Apple, General Motors and The New York Times think it’s hard to operate now, just wait until Beijing trolls them with regulatory tweaks and new subsidies for state-owned enterprises. Geopolitical fallout, too, must be considered. No global problem, be it financial imbalances, climate change or South China Sea tensions, can be solved without Xi’s participation.

Another irony is that China’s state-run media has been gunning for a Trump presidency, figuring the Communist Party’s global soft power can only increase as he shoots Washington’s reputation to shreds. But if China gets Trumped and faces markedly slower growth, its leaders will have even less confidence to clamp down on bubbles in debt, credit and real estate. Calls by global funds to sell Hong Kong property stocks on a Trump win also worries Beijing, given the pro-democracy forces gaining momentum there.

One can hope a President Trump’s economic team, or Congress, would dissuade him from repeating the Smoot-Hawley tariff debacle of the 1930s. But even a watered-down trade clash could change everything in Beijing and boomerang back to a place Trump claims he’ll make great again.

Based in Tokyo, William Pesek is executive editor of Barron’s Asia and writes on Asian affairs. www.barronsasia.com

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