'China's GDP faces risk of falling by 2-2.5 percentage points'

Beijing: The set of 34% tariffs imposed by US President Donald Trump on Chinese exports could hit China's GDP by two to 2.5 percentage points, further affecting the Chinese economy which is struggling with slowdown, a top Chinese Economist said.

Larry Hu, chief China economist at investment bank Macquarie, estimated that the duties could lower China's exports by 15 percentage points and its gross domestic product growth by 2-2.5 percentage points.

"The impact could manifest itself through multiple channels such as falling US demand for Chinese goods, the potential global economic slowdown and the hit on export re-routing," Hu wrote in a research report, the Hong Kong-based newspaper South China Morning Post reported on Monday.

China this year has fixed a 5% GDP growth target as its economy struggles with a slowdown weighed down by stagnating domestic consumption and a housing sector crisis. With the latest 34% tariffs, Trump's levies on Chinese exports amounted to 54%. This is in addition to about 15% tariffs slapped during Trump's previous term. Trump's successor Joe Biden retained those duties.

Furthermore, Trump ended the duty-free exemption for China's small parcel exports, which amounted to $30-50 billion annually. Consequently, China's exports, a major driver of economic growth, are poised for a sharp decline, the SCMP report said.