Washington/Beijing: Due to the trade war initiated by US President Trump, the Chinese economy is on the verge of decline, and if further burdened with taxes, it would collapse in the year 2020. A report published by the International Monetary Fund (IMF) regarding China, warns that the Chinese economy can decline by 0.8%, under the pressure of the taxes imposed by Trump. Reportedly, in the last month, the Chinese economy is at its lowest level in three decades.
Last week, President Trump announced a tax on Chinese goods at 10% $300 billion and announced to increase. With this announcement of President Trump, all the Chinese good imported into the United States will be taxed, and the implementation will start from September 1. Trump justified the new taxes alleging that the Chinese response to the trade negotiations was not satisfactory.
The IMF report had been prepared before the announcement by Trump. But it considers the taxes imposed by President Trump on the Chinese goods worth $ 250 billion as well as the taxes that may be imposed in the future. The new IMF report indicates the decline in the Chinese economy, since the beginning of the trade war.
The report warns of an already declining Chinese economic growth rate in the year 2019 owing to the trade war which it states will continue in future too. The IMF has predicted that the Chinese economic growth rate will decline to the level of 6.2%. This report does not take into account the new taxes imposed by the United States. Therefore, there are indications that the new taxes imposed by Trump will bring the growth rate of the Chinese economy to less than 6.2%.
At the same time, the IMF predicted that the Chinese economy would be severely hit by the new taxes imposed by the United States. As forecasted in the report, the Chinese economy may record a decline of 0.8% in the year 2020. James Daniel, a senior official in the IMF said that the new taxes, even if they are maintained at the 10% level, will cause a certain decline of 0.3% in the Chinese economic growth rate.
The IMF has expressed fears that the impact of the decline in the Chinese economy will be seen on the global economy too. Therefore, there are indications that the warnings issued by the IMF and other financial institutions about a global recession might become a reality.