The world’s top two economies have imposed tariffs on hundreds of billions of dollars of each other’s goods. The measures are expected to take a heavier toll on China’s economy, which relies more on exports and has already started losing steam this year.
But the conflict is encouraging Chinese companies and government officials to move ahead with changes that could eventually make the economy more competitive and more appealing to foreign investors.
The US Commerce Department starkly exposed China’s reliance on American technology this year when it blocked US companies from selling vital components to Chinese telecommunications hardware maker ZTE, forcing it to halt almost all of its operations.
Scott Kennedy, an expert on the Chinese economy at the Center for Strategic and International Studies, said, “You’re going to see probably more intensive efforts at domestic innovation.”
Beijing has already taken a series of steps recently to help the slowing economy, including tax cuts. Premier Li Keqiang last month pledged more pro-business measures.
If that includes allowing greater competition from foreign companies, it could force Chinese companies to up their game and become more productive.
Such changes “will boost the competitiveness of the economy in the long run” and help China to “generate better quality of growth,” said Aidan Yao, senior emerging markets economist at asset management firm AXA Investment Managers.