China to lose more than the US in the trade war - Rabobank

Analysts at Rabobank suggest that there will be a much higher impact on China compared to the US in case of a further escalation of trade tensions and expect global economic growth will be 2.0ppts lower in 2030

Key Quotes

“In China, the current and announced measures shave off 1.6ppts of economic growth (400 USD per Chinese citizen) in the long-run (2030), and could be as high as 5.7ppts (1,500 USD per Chinese citizen) in case of a full-fledged trade war. The US will have to absorb economic losses of 0.9ppts to 1.6ppts (600-1,110 USD per US citizen), respectively.”

“As US per capita income is more than 3 times higher than the Chinese average this underlines that the trade war hurts China much more than the US.”

“We find a much higher impact on China compared to other studies in case of a further escalation. This can explained by the fact that we expect a heavy depreciation of the Chinese currency and the fact that the trade war weighs substantially on China's productivity growth, going forward.”

“As we expect that China is not prepared to meet US demands, the trade tensions between both countries will probably continue for over a longer period of time. This study provides a forward-looking picture of what would be the detrimental economic effects in that case.”