China's Influence from Trade War Isn't as Big

Global trade war has been making a lot of noise, and many investors can't help but be worried. However, Chinese investors don't need to worry too much: no matter how intense the trade war gets, the sky won't fall.

First, let's look at the data. In 2024, China-US trade volume was $6883 billion, while China's total import and export volume was $62 trillion, with China-US trade accounting for only 11%.

From a trade surplus and GDP perspective, in 2024, the trade surplus against the US accounted for about 2% of China's total GDP.

The trade war is indeed not good news, but its impact isn't as big as people think. The sky won't fall.

To investors who are investing in China, we need to understand one thing: China's economic development has been driven by what?

Indeed, at the beginning of reform and opening up, due to our own market economy foundation being relatively thin and technology level being relatively backward, entering the global market played a very important role in promoting China's economic development.

However, we need to note that foreign trade is an important help for China's economy, but not the decisive factor.

The decisive factor behind China's economic development is: tens of millions of people all want to make money and live well.

Since reform and opening up, with the establishment of a market-oriented system and a rule-of-law environment, the working enthusiasm of tens of millions of Chinese people has become increasingly strong. People realize that as long as they work hard enough, they can earn their own money and live well.

Tens of millions of people all want to work hard, make money, and live well – this is the most important reason behind China's economic development since reform and opening up. The desire for a better life from tens of millions of people is something that no country can block, let alone strong countries like the United States.

Foreigners do business with Chinese people not because they want to help us develop or contribute to our development. They do it because they can make money.

We can see that domestic production costs are $100 per pair of shoes, while Chinese factories can produce them for $20. Domestic engineering teams take 9 months to complete a project, while Chinese engineering teams can finish it in 2 months. Domestic engineers design phones and computers, which have half the efficiency of those produced by Chinese factories.

We need to know that even among developing countries and regions, there are many places with large labor forces. What's special about China is that its people work harder, are more diligent, and want to make money more than anyone else.

So, tens of millions of people, especially those with increasing education levels in China, all want to make money and live well – this is the biggest driving force behind China's development.

Regarding US trade, it would be best if there were a bit more, but even if not, it's not the end of the world. The United States can just raise tariffs to the sky if they want to.

Last week at Nanjing High-Speed Rail Station, I was chatting with a friend about the US-China trade war. After hanging up, an old man approached me and asked me what I thought about the trade war. We chatted for a while, and I learned that he worked for a domestic company selling precision instruments produced by a US company.

Seeing the old man's worried face, I tried to console him: "If your precision instruments are unique enough, it won't be a big deal – we can just raise prices to cover the tariffs." But my consolation didn't work at all, and the old man's brow furrowed even more tightly.

Just one sentence conveyed the truth about China's economy today.

To investors, understanding that "the trade war won't bring down the sky" is very important. As long as we're clear about this, we'll have enough confidence in our country and our stocks.

When we hold these confident sentiments, based on rational thinking (rational thinking often leads to more stable and consistent confidence), and then review market fluctuations, we'll feel carefree and at ease.

Author: Chen Jiawu, Chief Investment Officer of Jiu Xuan Qing Technology

(The opinions expressed in this article are the author's personal views, and do not represent the position of Hexun News. Investors should operate based on their own judgment, taking full responsibility for any risks.)

This article was first published on WeChat public account: e Company Official Account. The article's content represents the author's personal views and does not represent Hexun News' position. Investors should operate based on their own judgment, taking full responsibility for any risks.