How does an escalating US-China trade war affect people’s well-being. In China, it depends on whom you ask. Some are energized by the fight. Electric-vehicle makers are in hyperdrive, pushing out luxury new models, self-driving features and battery-charging technologies that allow drivers to recharge almost as fast as filling a gas tank. Instead of selling cars to Americans, the likes of BYD Co are taking on Tesla Inc in growth regions such as Southeast Asia.
There is also talk of an “engineer dividend” — credit to Chinese President Xi Jinping (習近平) for his focus on higher education in sciences. The success of DeepSeek’s reasoning model gave rise to a realization that China is not just a manufacturing powerhouse, whose status is being challenged by US President Donald Trump’s tariffs. Rather, Beijing might have found a fresh growth model. It can grab market share in software services, which the US excels at. Almost every week, Chinese tech firms have been releasing new artificial intelligence models and applications.
In part because of a stock market rebound, luxury home sales in Shanghai are booming. Property markets in tech hubs such as Hangzhou and Shenzhen are also seeing a revival, a welcome reprieve after a four-year downturn.
After all, China has become less reliant on US consumers since Trump’s first trade war in 2018. Exports to the US accounted for just 15 percent of the total last year, versus 20 percent a decade earlier. The economy is forecast to shrink by only about 3 percent even if the entire trading route to the US gets wiped out.
However, beneath that stoic defiance are genuine concerns about how to make a living, especially among blue-collar workers. A decline in exports, until now a rare bright spot in an otherwise anemic economy, would only create more competition for low-skilled jobs. Already, demand for their labor is diminishing due to factory automation and the end of a decade-long property boom. Last year, the manufacturing and construction sectors absorbed just more than 40 percent of migrant workers, versus more than half a decade earlier.
Apparel is the third-largest category of US imports from China, after communications devices and electronic equipment. On average, the textile industry hires more than 25 people for every 1 million yuan (US$137,561) in GDP generated. About 16 million jobs could be lost thanks to Trump’s tariffs, estimates by Goldman Sachs Group Inc show.
What these displaced might do next matters to the rest of the 425-million-strong blue-collar workforce. People have in the past few years been moving in droves into the gig economy, working as housekeepers, drivers, delivery workers and social-media influencers.
Already, some of these sectors are getting crowded. Last year, the number of ride-hailing drivers jumped 27 percent to 38 million, prompting some local governments to warn about overcapacity. No surprise, their average monthly pay fell. Or consider the 18 million social-media livestreamers, often young people who want glamor in their work. Most of them are not getting rich — they are barely getting by. A recent academic survey shows that 93 percent make less than 3,000 yuan a month, not even half of what an average delivery person earns.
It is unlikely China would launch the kind of bazooka stimulus witnessed in the aftermath of the 2008 global financial crisis, the last time its exports posted double-digit falls. Back then, more than a third of migrant workers, or more than 80 million, were employed in manufacturing. The magnitude of job losses was much larger.
Barring mass street protests, the government’s attitude toward blue-collar workers has been that since many have few skills, they can be flexible. Manufacturing jobs gone? No problem, they can go into the services sector, or back home to the farm. During the global financial crisis, at least 20 million laid-off migrant workers returned to rural areas. This attitude is unlikely to change just because of Trump.
Indeed, this trade war only exacerbates a separation of the elite from the grassroots. For the skilled and well-to-do, US tariffs barely touch their lives, and they are thinking of new money-making opportunities now that Trump is tearing up the existing world order (gold, anyone?). However, millions of others are only getting more anxious.
Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. A former investment banker, she was a markets reporter for Barron’s. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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