Back on topic, China needs to reduce its reliance on real estate market and cut its debt level in the coming decade. With the Five Eyes alliance aiming to contain China, domestic demands need to be ramped up to support Chinese companies facing increasing hardship overseas. Problem is that consumer spending is being heavily burdened by housing prices.
Yes, those companies targeted need to be supported through domestic demand.
With the infused money, those national champions need to double down on R&D and innovation. Rest of the world, if properly capitalized on, should be enough to continue to become dominant global players.
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Chinese companies must prepare for worst-case scenario in ongoing trade dispute with US
By Hu Weijia Source:Global Times Published: 2018/12/16
Some people believe downward pressure on the US economy will give the White House less leeway to carry out a trade war, easing tensions with China, but this is not necessarily the case.
Although the US economy is experiencing one of its longest expansions on record, a slowdown is looming. Some analysts believe the US economy will lose steam in the second half of next year as the effects of the tax cut fade.
Concern about an economic slowdown is one reason behind the year-end volatility in the stock market. US shares have been on a wild ride recently, with both the Dow Jones Industrial Average and the S&P 500 turning negative last week.
As tariff rhetoric starts to bite, many people hope Washington can stop the trade war and advance its relationship with US trade partners. However, downward pressure on the US economy may mean these people are disappointed.
History shows there were always more protectionist measures in the US when the economy slipped into recession. Trade protectionism rose during the Great Depression of the 1930s, as well as during the two oil crises of the 1970s, and again in 2002 when the steel industry had a hard time.
Amid these downturns, pressures forced the US government to resort to protectionist measures to tackle unemployment.
US President Donald Trump campaigned on a promise to bring back manufacturing jobs after decades of decline. US factory output has surged, along with new orders, but the trade war is also creating difficulties for some US companies and forcing them to close plants in the US.
The rise of global value chains has dramatically altered the production of goods in recent decades. For products made in the US, manufacturers always procure components from a large number of suppliers in China.
Tariffs on Chinese goods will ultimately restrict the development of the US manufacturing industry and increase downward pressure on the economy.
This will perhaps lead to a downward spiral. That would be the worst-case scenario, but Chinese firms should be prepared. The trade war has made a possible slowdown of the US economy especially dangerous. The only solution is to resolve trade problems before the US economy enters a downward economic cycle.
http://www.globaltimes.cn/content/1132145.shtml