A new report indicates that retail sales in China are likely to match or even exceed those of the United States in 2018, in a development that will have profound consequences for Sino-American trade and political relations.
Japanese bank Mizuho sees Chinese retail sales topping USD$5.8 trillion this year, roughly on par with the projected figure for the United States.
Chinese consumption has undergone staggering growth in tandem with the rise of its middle-class, with its retail sales just a quarter of those in the US a mere decade ago.
In some key areas Chinese consumption is already outpacing that of America’s. While the 17.6 million vehicles sold in the United States in 2016 marked a record-breaking figure, in the same year China saw sales of 24 million passenger vehicles.
According to Mizuho chief China economist Shen Jianguang, China’s fast-expanding consumer clout will have profound impact on its relations with the US – especially during a period when the incumbent Trump administration is stepping up protectionist trade policies as part of its “America First” stance.
“China’s best bargaining chip is its massive and fast-growing domestic market,” said Shen to The Washington Post.
“This will change the balance (of power) tremendously, as it is the first time when the US is dealing with a market of equal size in a potential trade war.
“China is one of the most important markets for many US multinational companies…this should lend China immense bargaining power.”
MIT economist and trade expert David Autor instead argues that the US retains considerable influence over China as an export market accounting for 19% of the country’s total exports.
“China exports a substantial piece of its GDP to the United States,” said Autor to the Post. “They are very dependent on our markets.”