China and U.S. Protectionism

The United States is ratcheting up the tariffs on imports from China. This is a serious threat to China’s economic growth. China can hardly expect to win by countering these U.S. tariffs. Devaluing the yuan could be a solution, but it would not come without risk and without causing other problems. China could instead seek to develop other exports markets to offset potential losses in the U.S. market. It could also speed up the changes that would further stimulate domestic demand. But this comes with its own set of challenges, mostly because such adjustments take time to implement.