To put things into perspective, of China's $4.1 trillion in trade in 2017, US accounted for $0.6 trillion. US has no alternatives for the bulk of that, it can't just switch China for another trade partner of such magnitude. It can't fill that capacity domestically. Tariffs of 20% on the import portion (500b) of that amount every year would amount to just $100 billion in outflows from China to the US, or $0 billion if China retaliated in kind-eg ban apple and have local providers take its Chinese domestic revenue share and storefronts. Precedents exist, eg google/facebook. They missed out on hundreds of billions in revenue by being banned. So many indirect options.
Even if China swallowed that temporarily, it doesn't have to stick around. It's economy grows by $1.2 trillion every 12 months and it would slowly shift that 500 billion elsewhere. It is developing Africa as we speak. Africa as a whole could swallow that difference in ~10-15 years. It has an economy of $2.2 trillion with 6% average growth year-year. It's a tiger for all intents and purposes and China is already its largest trade partner ($300 billion annually as of 2017).
Anyway, that's some perspective.
In quarter 4 of 2017 - q1 of 2018 China surpassed the US as the world's largest consumer market. Back in 2014 it became the biggest luxury goods consumption market (eg. high end smart phones, laptops, etc). Back in 2016 it became the biggest software market (eg games) . In 2017 it became the biggest entertainment market (eg movies). We're at the cusp of a major global transition. Right in the thick of it.
And yes most companies in China that produce goods are making them for the domestic market. A small proportion of the biggest ones actually export abroad. So most Chinese companies are dependent on local sales. But what drives most Chinese economic growth, despite consumption being so big and service sector growing year-year, is actually construction. That's entirely domestic too.
Only thing China doesn't have is a large private investor finance market, but that actually shields it from global economic trends. Finance and banks are still strictly government controlled. Public has limited participation.
Anyway neither the US nor Europe have the tools at their disposal to hurt China's domestic economic core. Europe doesn't even have the will because why would it. It is happy with the trade situation.
Not really, when you look at value added instead of just raw import/export numbers.
China produces 70% of global high technology, most of it is consumed domestically. This is as high up the value chain as you can go. They've been cultivating microprocessor design and fabrication over the past 5 years and domestic facilities are becoming available. By 2020 the first phase will be complete. This is the final piece of the value adding puzzle. To design and build the brains of high technology devices. China can already do it on a small scale, that looks set to ramp up very soon. AMD already sold them a license for the Ryzen architecture, a nice boost.
It is my job to keep current on this, I work in the IT sector and China is at the center of any decision my company makes. Granted Australia has China as our largest import/export/investment partner, but so do 60% of other countries, i.e most.
Even with a smaller nominal GDP than the US, China's share of global trade is dominant - only sector where nominal measure matters; it is now the biggest importer/exporter of goods thanks to a massive uptick in imports of raw resources from Africa in 2017. But in real effective terms domestically speaking, when adjusted for costs, its economy is already 30% larger than America's, and pulling further ahead because its workforce has so much further to go in regards to wage growth and productivity improvement. This is a lethal combination. Whoever picks an economic war with China today will be so sorry at the end of it. It's too late to throw a spanner in the works. Maybe this would have worked in the early 2000's, but American companies were too busy getting rich off China's cheap labour back then. The irony is, they still are, but China is too big to bully now.
This has little to do with Trump. American oligarchs saw China's trillion dollar plans for the new five lane silk road and went into full panic mode. If China establishes dominance over Eurasia its over for America in Eurasia AND the Western Pacific. Empire ded. Somebody has been feeding Trump nonsense to incite him to react spastically. It won't work. Too late. He can only hurt US relations with China and cripple future economic prospects for American companies in the worlds most dynamic market (i.e China).
