{"id":22582,"date":"2024-12-16T13:40:54","date_gmt":"2024-12-16T03:40:54","guid":{"rendered":"https:\/\/woodcentral.com.au\/?p=22582"},"modified":"2024-12-16T16:20:39","modified_gmt":"2024-12-16T06:20:39","slug":"ahead-of-trade-war-china-moves-to-trump-proof-its-supply-chains","status":"publish","type":"post","link":"https:\/\/woodcentral.com.au\/ahead-of-trade-war-china-moves-to-trump-proof-its-supply-chains\/","title":{"rendered":"Ahead of Trade War, China Moves to Trump-Proof Its Supply Chains"},"content":{"rendered":"\n

China is looking to “Trump-proof” its economy ahead of a potential trade war with the Chinese Communist Party (CCP) rolling out a string of new measures to support its ailing economy, including rate cuts, increased borrowing, and a US $1.4 trillion debt relief plan for local governments.<\/p>\n\n\n\n

Announced last week as part of the Central Economic Work Conference, CCP officials have pledged to stabilise the stock and real-estate markets\u2014which have seen lumber and log imports drop over the past 12 months<\/a>\u2014while also preparing for “external shocks,” including potential trade wars with the incoming Trump administration<\/a> and Russia.<\/a><\/p>\n\n\n\n

\"2JDR54W
Last week, Wood Central revealed that Russia has implemented a 55% tariff on all furniture components from China – sparking fears of a new trade war between the two countries. (Photo Credit: Image ID:2JDR54W)<\/figcaption><\/figure>\n\n\n\n

Wood Central understands that China’s economy is still grappling with subdued consumer spending, a lingering property crisis, and deflation risks. Despite a projected growth rate of 5% this year, renewed trade confrontations could jeopardise its export-driven recovery, forcing Beijing to depend on domestic economic measures to sustain growth. As a result, the Chinese Politburo has indicated a shift from its “prudent” monetary stance to a “moderately loose” approach, signalling potential reductions in interest rates, bank reserve requirements, and enhanced central bank funding.\u00a0<\/p>\n\n\n\n

While stimulus has been increasing since September, including relaxed home-buying restrictions and reduced borrowing costs, economists remain sceptical about its effectiveness. Speaking to the Wall Street Journal, Morgan Stanley highlighted<\/a> concerns over China’s ability to sustain GDP growth – predicted to slide from 5% in 2024 to 4.4% in 2025 and 4% in 20256, without structural reforms, including strengthening its social safety net, to boost consumption.<\/p>\n\n\n\n

\"More
More than 30% of the world’s forest products trade goes through China – however, with the Chinese economy in decline, traders are now buying less sawlog and lumber, causing a slowdown in the global timber market. (Photo Credit: lemontreeimages via Adobe Stock Images)<\/figcaption><\/figure>\n\n\n\n

In October<\/a>, Wood Central revealed that (now) President-elect Trump plans to introduce a 60% tariff on all goods traded into the United States from China\u2014a move that would have major implications for the global supply chain of timber, pulp, and paper products. As it stands, US $10 billion worth of wood is traded between the US and China every year<\/a><\/em>, up from $7 billion a decade ago.<\/p>\n\n\n\n

“The Chinese and the US forest markets are closely linked, according to a Chinese study<\/a><\/em> looking at the impact of a trade war on the global supply chain of forest products. “The main forest products imported by the US from China are plywood, fiberboard, and wooden furniture, accounting for 46.68%, 33.31%, and 50.33% of US total imports.”<\/p>\n\n\n\n

“On the other hand, China’s main imports of forest products are industrial roundwood, sawn wood, and waste paper, accounting for 42.93%, 42.27%, and 71.12% of the total US exports of these products,” they said, adding that “these imported products also amounted for 10.25%, 18.09%, and 46.01% of the total Chinese imports.”<\/p>\n\n\n\n

The study found that a significant portion of the trade between China and the US shifted to other parts of the world, “with Vietnam and New Zealand being the biggest winners” and Thailand amongst the biggest losers. “Product substitution occurred mainly in Asia and Europe, where price changes were within 10%,” it said, arguing that “China benefited slightly, but the US experienced a major loss from a potential trade war.”<\/p>\n\n\n\n