【招银国际】China’s policy options in Trade War 2.0-250410（9页）.pdf

1、 PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG:RESP CMBR OR http:/.hk 1 MN 10 Apr 2025 CMB International Global Markets|Equity Research|Market Strategy China Economy Chinas policy options in Trade War 2.0 As China and the US start to play th

2、e chicken game before negotiations,things could get worse before getting better.The Sino-US conflict could first escalate as China shows its willingness to retaliate with counter-tariffs,export controls on critical materials,cut in investments to the US,technology transfer restrictions and RMB depre

3、ciation in a controlled manner,while the US might launch targeted financial sanctions and delist Chinese companies from the US stock market.In terms of economic impact,a trade war is more akin to a pandemic instead of a financial crisis as they are both supply shocks.The impact of trade war on econo

4、mic growth should be smaller than the lockdown during the pandemic,as the former mainly affects cross-border trades,investment and supply chain activities while the latter affects both cross-border and domestic activities.However,the impact of the trade war might last longer than the pandemic as a w

5、ar destroys mutual trust and sows the seeds of hatred between countries.To offset the trade war shock,China may lower RRR&LPRs and launch additional fiscal stimulus to boost the stock market,housing market and consumer demand.China will continue to promote self-reliance in key technologies to reduce

6、 vulnerability to external pressure.China will diversify its trading partners by strengthening trade and investment ties with non-US economies.Despite the hard-line stance,China will keep the door open for talks.A comprehensive deal-perhaps involving domestic demand stimulus,overcapacity reduction,i