<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1600" height="900" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/07/106463174-1585290052493gettyimages-871925648.jpeg" alt="" class="wp-image-508834" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/07/106463174-1585290052493gettyimages-871925648.jpeg 1600w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/106463174-1585290052493gettyimages-871925648-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/106463174-1585290052493gettyimages-871925648-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/106463174-1585290052493gettyimages-871925648-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/106463174-1585290052493gettyimages-871925648-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/106463174-1585290052493gettyimages-871925648-1536x864.jpeg 1536w" sizes="(max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Chinese President Xi Jinping and former U.S. President Donald Trump in Beijing, China, in 2017. Artyom Ivanov | TASS | Getty Images</figcaption></figure>



BEIJING — If Donald Trump wins the U.S. presidential election, his plans for 60% tariffs on Chinese goods could be a “major downside growth risk” to China, according to Goldman Sachs.



Chances of Trump becoming the next president ticked higher after he survived an assassination attempt on Saturday and selected former critic JD Vance as his running mate two days later.



“Right now exports are a major bright spot in the Chinese economy, and I think the policymakers might want to be prepared,” Hui Shan, chief China economist at Goldman Sachs told CNBC’s “Squawk Box Asia” on Tuesday.



“We are seeing tariff narratives, not only in the U.S., but across other major trading partners of China’s,” she said. “So this is not going to be a sustainable driver of growth for China.”&nbsp;



The U.S. is China’s largest trading partner on a single-country basis, while the European Union has fallen behind Southeast Asia as China’s largest regional trading partner. Trump had raised duties on Chinese goods when president in 2018 and has threatened to increase them to 60% if reelected this fall.\



The contribution of goods exports to real GDP growth in China for the second quarter of this year was the highest since the first quarter of 2022, when Covid restrictions limited domestic economic activity, according to Citi.



Meanwhile,&nbsp;Beijing’s push to develop high-end manufacturing has not yet been able to fully offset a real estate slump and lackluster consumption.



U.S. officials such as Treasury Secretary Janet Yellen have said that China’s policies to boost its industrial capability and technological self-reliance have led to U.S. job losses.



<h2 class="wp-block-heading" id="h-china-the-biggest-threat"><a></a>China the ‘biggest threat’?</h2>



In his first interview since he was selected as Trump’s running mate, Vance told Fox News that instead of the war in Ukraine, China was the “real issue” for the U.S. and posed the “biggest threat.”



The Biden campaign has criticized Trump’s pick, saying the choice was deliberately made “because Vance will do what Mike Pence wouldn’t on January 6: bend over backwards to enable Trump and his extreme MAGA agenda, even if it means breaking the law and no matter the harm to the American people.”



Supporters of Trump, who was president at that time, had stormed the U.S. Capitol in an attempt to overturn the 2020 presidential election results on January 6, 2021.



Asked about Vance’s comment, China’s Ministry of Foreign Affairs spokesperson Lin Jian said Tuesday at a daily press briefing, “We are always opposed to making China an issue in U.S. elections.”



<h2 class="wp-block-heading" id="h-calls-for-stimulus"><a></a>Calls for stimulus</h2>



China’s economy grew by 4.7% in the second quarter compared to a year ago, missing economists’ expectations and bringing growth for the first half of the year to 5%. It prompted some calls for more stimulus if the world’s second-largest economy is to reach 5% growth for the full year.



The downside risk from potentially higher U.S. tariffs under Trump would primarily come from the greater uncertainty and tighter financial conditions, as well as pressure on the Chinese yuan, Goldman’s Shan said. She pointed out that tariffs in 2018 did not significantly dent China’s exports to the U.S.



More recent data, however, showed a slowdown in that trade. China’s exports to the U.S. rose by a modest 1.5% in the first half of the year.



“Policymakers need to think about domestic demand and focusing on something that is more persistent and sustainable for the growth outlook,” Shan told CNBC on Tuesday.



If 60% tariffs are imposed, “that’s pretty high and we think the implication for the macro economy is pretty significant,” she added.



So far, China has held back on stimulus measures. The country’s top leaders are meeting in Beijing this week for a highly anticipated Third Plenum, which is expected to determine long-term economic policy goals.



Citi analysts said Monday that weak retail sales and disappointing second-quarter growth won’t be enough to convince Beijing to increase support for the economy.



“Policymakers may tolerate short-term weakness amid the structural shift of the property sector,” the analysts said. “More concerns on trade and external relationships could also lead China to save the policy space for future.”



Citi forecasts 5.0% growth in real GDP growth for China this year.



China’s U.S. dollar-denominated exports grew by 3.6% in the first six months of the year after better-than-expected global demand for Chinese goods in recent months.



“Manufacturing and infrastructure investment may stay robust and exports should stay in decent [year-on-year] growth in [the third quarter], with possible front-loading of shipment orders in [the second half of the year] due to fears of higher tariffs,” Tao Wang, head of Asia economics and chief China economist at UBS Investment Bank said in a note Tuesday.



She said Chinese authorities would likely be reluctant to roll out major stimulus in the next few months in order to save resources in the case of greater economic weakness and increased tariffs.



UBS forecasts 4.9% growth for China’s economy this year.



<h2 class="wp-block-heading"><a></a>Trump the dealmaker</h2>



Not all analysts believe a possible Trump presidency will prove detrimental to China, though.



Ben Harburg of Corevalues Alpha told CNBC on July 4 that he believes China is more likely to have “positive” trade outcomes under a Trump presidency, given the ex-president’s “transactional nature.” “He’s a dealmaker, and like any negotiator, he likes to kind of set the bar low, and kind of set his price low, and then work up from there,” the portfolio manager said on “Street Signs Asia.”



Speaking on foreign policy, Harburg pointed out that another Biden term would also mean continued tariffs, as well as “encroachment on Chinese domestic issues” — which would not significantly improve China’s economy, nor U.S.-China relations.



He said a Trump-China partnership would signify “a more binary potential for a positive outcome for China.”



CNBC’s Sonia Heng contributed reporting from Singapore.

106463174-1585290052493gettyimages-871925648

What would a second Trump presidency mean for China? Goldman Sachs weighs in

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="2048" height="1365" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107405347-1713901590053-gettyimages-1467862508-r15207-fr-01-ge-01-scaled.jpeg" alt="" class="wp-image-508539" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107405347-1713901590053-gettyimages-1467862508-r15207-fr-01-ge-01-scaled.jpeg 2048w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107405347-1713901590053-gettyimages-1467862508-r15207-fr-01-ge-01-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107405347-1713901590053-gettyimages-1467862508-r15207-fr-01-ge-01-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107405347-1713901590053-gettyimages-1467862508-r15207-fr-01-ge-01-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107405347-1713901590053-gettyimages-1467862508-r15207-fr-01-ge-01-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/107405347-1713901590053-gettyimages-1467862508-r15207-fr-01-ge-01-1536x1024.jpeg 1536w" sizes="(max-width: 2048px) 100vw, 2048px" /><figcaption class="wp-element-caption">Golden Horn and Bosphorus at sunset, Istanbul, Turkey Matteo Colombo | Digitalvision | Getty Images</figcaption></figure>



Turkey came out miles ahead of the rest of the world in an annual global wealth ranking — in a result that may come as surprising, given the country’s high levels of inflation.



“Türkiye stands out with a staggering growth of over 157% in wealth per adult between 2022 and 2023, leaving all other nations far behind,” Swiss bank UBS wrote in its Global Wealth Report 2024, using the local spelling for the country’s name.



The next-highest countries in terms of average wealth growth per adult were Russia and Qatar with nearly 20% and South Africa with just over 16%. In the U.S., average wealth per adult grew by nearly 2.5%.



Inflation in Turkey sits at nearly 72%, an eye-watering figure for the country’s 85 million people, many of whom have seen a dramatic drop in their purchasing power over the last several years. In the last five years, the Turkish lira has lost nearly 83% of its value against the dollar, and the currency trades at 33 lira to the greenback as of 09:07 a.m. London time on Wednesday.



But for Turks who own assets like homes, wealth has grown, as inflation pushes up the costs of those holdings.



The UBS report defines net worth or “wealth” as “the value of financial assets plus real assets (principally housing) owned by households, minus their debts.” In a call with journalists, some of the report’s authors broke down the relationship between inflation and wealth rises in Turkey.



“In certain ways, the high pace of inflation also helps explain why wealth has risen much much more in local currency terms, at least [more] than in other countries because it’s worth keeping in mind that wealth is measured in nominal terms,” Samuel Adams economist at UBS Global Wealth Management, told CNBC.



“If inflation is very high, what tends to happen is that if you have a real asset like housing, the house prices tend to rise in line with inflation, if not even faster,” he said. “So those people with have homeownership, or who have equities, which also tend to perform fairly well in those environments, they tend to see their wealth accumulate a bit faster.



“Of course, it doesn’t mean that everybody benefits to the same extent,” Adams added. “If you’re not in those assets, if your wage rises don’t keep pace with inflation, then, of course, it will be fairly negatively affected.”



The report also noted the “currency effect”, which is what changes wealth growth the most — local currency growth figures for wealth are often significantly different from those in dollar terms.



“Türkiye’s already exceptional growth of over 63% in USD &#8230; more than doubles to nearly 158% in Turkish lira,” it said. Other examples in the report included Japan, which in dollar terms has seen less than 2% average growth in wealth per adult in U.S. dollar terms between 2022-23, but in local currency that growth was 9%.



Evaluating countries’ average wealth growth between the years of 2008 and 2023, “the most dramatic evolution has taken place in Türkiye,” UBS wrote, “where average wealth per adult in this period has shot up by 1708% in local currency.”



UBS Global Wealth Management’s Chief Economist Paul Donovan pointed out that being asset-rich does not necessarily mean being cash-rich — in Turkey, this could actually be the opposite.



“In terms of living standards rather than wealth, it’s also important to remember that if you own a house, the value of your house has gone up, but your real wage may be negative at the same time. So you can be &#8230; asset rich and cash poor,” Donovan said last week.



“That’s certainly a possibility, where a lot of the stresses that have arisen in the Turkish economy over the last few years have come about because of negative real income,” he added, “not necessarily what’s happening on the asset side.”

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/07/108003607-1720573755368-gettyimages-2157355769-cfoto-dailylif240617_npCKV-820x461.jpeg" alt="" class="wp-image-505971" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/07/108003607-1720573755368-gettyimages-2157355769-cfoto-dailylif240617_npCKV-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/108003607-1720573755368-gettyimages-2157355769-cfoto-dailylif240617_npCKV-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/108003607-1720573755368-gettyimages-2157355769-cfoto-dailylif240617_npCKV-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/108003607-1720573755368-gettyimages-2157355769-cfoto-dailylif240617_npCKV-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/108003607-1720573755368-gettyimages-2157355769-cfoto-dailylif240617_npCKV-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/07/108003607-1720573755368-gettyimages-2157355769-cfoto-dailylif240617_npCKV.jpeg 1920w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Consumers are shopping at a supermarket in Qingzhou, China, on June 12, 2024.  Nurphoto | Nurphoto | Getty Images</figcaption></figure>



BEIJING — China’s consumer price inflation rose by 0.2% in June from a year ago, missing expectations, while producer prices fell in-line with forecasts, data from the National Bureau of Statistics on Wednesday showed.



China’s consumer price index was expected to rise by 0.4% year-on-year in June, according to a poll by Reuters.



The producer price index, which measures factory-gate prices, dropped by 0.8% from a year ago — in line with expectations.



Core CPI, which strips out more volatile food and energy prices, rose by 0.6% year-on-year in June, slightly slower than the 0.7% increase for the first six months of the year.



Pork prices surged by 18.1% in June from a year ago, while beef prices fell by 13.4%. Tourism prices rose by 3.7% year-on-year in June, down by 0.8% from May.



“The risk of deflation has not faded in China. Domestic demand remains weak,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in a note.



He added that China would rely on exports to support growth in the first half of the year.



The country is scheduled to release trade data for June on Friday.



Lackluster domestic demand in China has kept inflation low, in contrast to major economies such as the U.S. where prices have remained elevated.







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