Economist Zhang Ming: A preliminary study on the impact of Trump's coming to power on the US and Chinese economies

1. U.S. Economy

2. Trump The Prussian government will impose an additional 10% tariff on global goods and a 60% tariff on Chinese goods, and will restrict China's indirect exports to the United States through third countries. This will worsen U.S. trade terms, push up inflation, and affect low- and middle-income people. Impact on family life;

3. Support traditional energy production and development, oppose excessive regulation, and cut green subsidies. This will further promote the export of the U.S. energy industry and will also help boost traditional manufacturing;

4. Reducing restrictions on artificial intelligence and supporting cryptocurrency may push the price of Bitcoin to rise further;

5. Implementing stricter restrictions on illegal immigration, which means that the United States The cost of mid- to low-end service industries may rise significantly;

6. Commodity prices may continue to fluctuate in both directions, but the risk of rising prices is increasing. Because Trump may reduce political and military involvement in Europe and the Middle East, conflicts in these places may intensify;

7. Overall judgment: The U.S. economy is likely to remain strong in the short term, and the probability of further decline in inflation is reduced. In the short term, the U.S. stock market is expected to continue to run at a high level, long-term interest rates are expected to continue to consolidate around 4% (bad for the bond market), the U.S. dollar index is expected to remain strong, and the price of Bitcoin is likely to continue to rise in the short term. However, due to limited space for interest rate cuts under the constraints of inflation, higher interest rates will put pressure on economic growth and the performance of listed companies. It is expected that the volatility of the U.S. stock market may increase significantly in 2025 (especially in the second half of the year);

2. China’s economy

1. Overall, the special The election of Trump instead of Harris may reduce the risk of geopolitical conflicts between China and the United States in the short term, but it will significantly increase the risks of a new round of economic and trade conflicts between China and the United States in the short term;

2. Lighthizer Ze will continue to play an important role in Trump's cabinet. Under his promotion, the United States will impose a 60% tariff on Chinese imported goods, and Chinese goods exported to the United States through third countries may also face investigations and taxes. The U.S. government may revoke China’s most-favored-nation status. The new round of trade war between China and the United States may also expand to other areas. For example, in the future, the U.S. government may restrict Chinese investors from purchasing some U.S. assets (such as real estate);

3. It is expected that by the second half of 2025, the U.S. government will impose additional tariffs on Chinese exports to the United States. We will then observe the specific impact of this round of tariff increases on U.S. inflation and low- and middle-income households. If the impact is controllable, further tax increases may be imposed on China's exports to the United States through third countries, which may occur as early as the first half of 2026;

4. The impact of tariffs brought about by Trump's taking office will be China's export growth in 2025 will have a significant negative impact. Under this scenario, it is expected that the Chinese government will intensify the expansion of macroeconomic policies and strive to achieve a growth of around 5.0% even if exports are blocked;

5. As U.S. inflation may still remain At high levels, this means that U.S. long-term interest rates and the U.S. dollar index will remain in strong ranges in 2025. For example, the 10-year U.S. Treasury yield may be in the range of 3.5%-4.2%, and the U.S. dollar index may be in the range of 95-104. This means that China may continue to face short-term capital outflow pressure, and the RMB exchange rate against the US dollar may continue to be under pressure;

6. For the Chinese government, the key is to put us first and unswervingly Use expansionary policies to stabilize growth and mitigate risks. The Chinese government may still set the economic growth target at around 5.0% in 2025. In terms of fiscal policy, the ratio of the central fiscal deficit to GDP in 2025 may be set at around 4.0-5.0%. At the same time, the central government may issue larger-scale special government bonds to maintain sufficient fiscal expenditure intensity. In terms of monetary policy, the People's Bank of China still has room to cut reserve requirements and interest rates. Until the CPI growth rate reaches 2.0%, monetary policy is expected to continue to maintain an expansionary trend. As the external environment deteriorates, the Chinese government will increase efforts to de-debt local governments and promote the stabilization of the real estate market.

7. Overall judgment: China’s economy will show a trend of first low and then high in 2025. The annual economic growth rate will be around 5.0%, and the GDP deflator will turn from negative to positive, which means that in 2025 China's nominal GDP growth is expected to rebound by about 2 percentage points. The Chinese stock market will perform better in 2025 than in 2024, and the 10-year government bond yield is expected to show two-way consolidation at the central level of 2.0-2.2%. The RMB exchange rate against the US dollar is still likely to show two-way fluctuations at the central level of 7.0-7.1. Real estate purchase restrictions in first-tier cities may be fully liberalized, causing housing prices in core areas to stop falling and stabilize in 2025. The growth rates of real estate investment and real estate sales are also expected to gradually stop falling and stabilize.