President Donald Trump‘s latest US$200 billion worth of tariffs and threats of more to come puts China in a tough spot, said Miller, CEO of China Beige Book, which independently collects data on the health of the Chinese economy.
China responded to Trump’s most recent tariffs by putting levies on US$60 billion worth U.S. goods.
“The tariff situation has created a very bad potential problem for [the] China fourth quarter of this year, potentially in a big way first quarter” next year as well, Miller said on “Squawk Box.”
Even if the U.S.-China trade dispute were resolved Jan. 1, “the Chinese economy will be hurting very badly” despite some other “growth engines not doing as poorly,” Miller said.
On Friday, China reported slowing economic growth in the third quarter of 6.5 percent, missing expectations and lower than the 6.7 percent expansion in gross domestic product there in the previous quarter.
By comparison, the U.S. economy advanced 4.2 percent in the second quarter. This week’s release from the Commerce Department is expected to show a GDP gain of 3.3 percent, according to the CNBC Rapid Update estimates.
However, Miller did acknowledge that China’s economy could be slowing due to domestic factors unrelated to the trade tensions with the U.S. He said the data indicate manufacturers in the country had already been doing “poorly” before any tariffs were first imposed, and the economy there was weakening after two years of rapid growth.
“What Trump did with his tariffs is pull a lot of the growth forward and really scare them in terms of what could happen in 2019,” Miller said.
The trade war between the world’s two biggest economies makes the G-20 meeting next month in Argentina “absolutely pivotal,” Miller stressed, saying further slowdowns in China growth could be avoided if there were any breakthroughs.
Efforts are being made to get Trump and Chinese President Xi Jinping talking at the summit.
Last week, U.S. Commerce Secretary Wilbur Ross said U.S.-China trade talks were on hiatus. Meanwhile, top Trump economic advisor Larry Kudlow said China has not showed interest in the proposals from the U.S.
“If we see a pull back at the G20 meeting next month, the markets are going to be very happy with that,’ Miller said.
“It won’t be a reversion to the status quo ante, but it could be a de-escalation of the tariff ramp.”
Source: CNBC International