China’s export-dependent cities and provinces are scrambling to provide relief to exporters, stabilize employment and avert the possibility of social unrest as an intensifying trade dispute with the United States threatens to further erode business, Reuters reports.
Guangdong, China’s biggest province by gross domestic product, this week offered to cut corporate taxes, slash electricity prices and reduce transport and land costs as additional U.S. tariffs since July exposed Chinese manufacturers to the prospect of empty order books.
The tariffs have come at a particularly bad time for the southern province, which is in the midst of an economic restructuring as it tries to move away from low-end, labor-intensive manufacturing.
The shift has already led to job losses.
Fujian, another big-exporting province on the coast, unveiled a similar package of measures in August to soften the blows of the trade war.
The plight of the provinces is just a taste of what could come if the United States carries out its threat to impose additional tariffs on all of its Chinese imports.
All-out U.S. retaliation would scuttle China’s plan to pivot away from basic industries to higher-value manufacturing, and could result in job losses in the hundreds of thousands, according to one private estimate.
“To some, this is a microcosm of what could happen to other export-dependent provinces should Trump roll out the full tariffs,” said Jonas Short, head of Beijing office at brokerage Everbright Sun Hung Kai.
“It’s also structural - cost rises due to land usage, as well as social security and funding pressures. But also the shock of these tariffs acted as a double whammy.”