US Tariffs Might End up Benefiting Chinese Economy, While China’s Retaliatory Tariffs Hurt Consumers, Say Chinese Netizens
Chinese netizens are hotly debating the U.S.-China trade tariffs, and many have come to an unexpected conclusion: the United States’ tariffs might end up being beneficial to the Chinese economy.
On the popular Chinese internet forum KD Net, where users frequently discuss current affairs, an article has been making the rounds, titled, “Why do so many people in China support Trump fighting a trade war?”
The author, writing under the pen name You Bin, hoped that trade tensions will force the Chinese regime to open up its economy, especially in the area of pharmaceuticals.
Speaking from experience, he talked about the exorbitant costs of medication in China; many patients and their family members seek out relatives living abroad to help them buy medication, particularly cancer treatment drugs.
Among low and middle-income countries, China indeed has some of the highest tariffs imposed on imported medicine. A 2017 analysis by the European Centre for International Political Economy determined that import tariffs on pharmaceuticals have the highest compounded financial burden on consumer prices in China—up to $6.2 billion annually.
China relies heavily on foreign imported medicine—they exceed China’s exports by $11.3 billion—but has continually increased tariffs. The number of tariffs increased from 30 in 2007 to 125 in 2016, “indicating a serious shift towards protectionism within the Chinese government,” read the analysis.
You Bin wrote in the article that he hoped the Chinese regime could lower tariffs on life-saving drugs and open up its trade policies. “This could help lower the trade deficit [the United States faces], elevate medical standards, and at the same time push domestic industries to truly innovate in science and technology,” he wrote.
Netizens React to China’s Retaliation
In the past few weeks, many scholars have analyzed the negative impact on China’s economy should a real trade war break out.
On Sina, a popular blogging platform, an economist formerly employed with China’s central government broke down why the regime’s retaliatory tariffs on U.S. soybeans would hurt China more than the United States. He blogs under the name “Ganwu Shenghuo.”
He predicted that China will likely end up buying soybeans from the United States anyways—via other countries that will import U.S. soybeans to meet China’s high demand. Meanwhile, other countries are likely to raise the prices—which will end up hurting Chinese consumers’ pockets.
The United States is the second-largest soybean exporter in the world after Brazil. China, meanwhile, is the world’s top buyer, importing about two-thirds of all soybeans traded globally, according to Reuters.
China heavily relies on foreign soybean imports. In the period of 2016 to 2017, China produced only about 12.9 million tons of soybeans, compared to its imported total of 96.1 million tons, according to data from the Agricultural Market Information System, an online database launched by the ministries of agriculture among the G20 nations.
Of the other products on China’s tariff list, he predicted that duties on U.S. chemicals will hurt Chinese businesses most, as they rely on imports for many raw materials, he said.
Other items such as tobacco and high-end cars are likely to only affect wealthy consumers, who may not be deterred by higher prices anyway, according to the blogger.
Another blogger, under the name of “Leng Yan,” pointed out that the argument that China can rely on Brazilian soybeans to replace U.S. imports is faulty: Brazil, located in the southern hemisphere, harvests in early spring, while the United States harvests in late fall. With year-round demand, China will find it difficult to import soybeans solely from Brazil.