By BAKHTAWAR TAUSEEF and ELIN JOENSSON
Global Business Journalism reporters
The former president of the Asian Development Bank warned Tsinghua students that trade tariffs threatened by American president-elect Donald Trump could harm growth in China and damage the global economy.
Takehiko Nakao, a leading expert on global finance and chairman of the Center for International Economy and Strategy, said Trump’s pledge to impose tariffs of at least 60% on all Chinese goods sold to the United States – and at least 20% on all other nations – would destabilize the international economic system. Trump promised Nov. 25 to impose 25% tariffs on goods imported from Mexico and Canada, and 10% tariffs on all Chinese imports, on his first day in office, Jan. 20, 2025.
”It is not only harming China, but also harming the [global] economy itself,” Nakao, a longtime Japanese Finance Ministry official, said to an audience of Tsinghua University students gathered at the School of Journalism and Communication on November 24.
The uncertainty of Trump’s presidency complicates global economic uncertainty, he told the Tsinghua audience. Among the existing crises, he said, are wars that have caused inflation surges and refugee exoduses, an increased divide within nations in terms of living standards, rapidly shifting demographics and climate change. The acceleration of digital economies and AI, democracy frictions and the future of geopolitics are other challenges, according to Nakao.
Nakao acknowledged several key economic challenges facing China and compared it with Japan's past experiences, known in international economic circles as “the lost decades” for decelerating economic growth and deflationary pressures. He highlighted concerns about China's real estate market, mounting debt issues, demographic challenges and stricter regulations.
“There is a possibility that China would become more like Japan in terms of a low growth rate,” Nakao stated.
He stressed the need for Chinese local authorities to support and address issues in the real estate sector, particularly the problem of undelivered apartments buyers have already paid for.
Nakao also pointed out the demographic shift in China, which has a rapidly aging population and declining birth rates.
“This is a very serious issue because this is about the supply side of the economy, which means less working population than the whole population,” he explained.
Nakao warned that existing economic policies are inadequate for today's interconnected world and cautioned against radical measures that could disrupt global trade.
Despite these challenges, Nakao stated that China still has “more space for growth” than Japan had in the 1990s. He cited China's lower income levels relative to the United States and Japan, however, its active investment in research and development as potential drivers of sustainable growth and an important step for China's future development.
“The most important part of the international order is the power of America,” he said.” I don’t know if you like it or not, but it’s reality.”
In uncertain times like these, he pushes for trade development systems as key to promoting peace.
“The total trade system is key to supporting peace, but also, of course, to promoting prosperity,” Nakao stated.
Comments