China’s Coastal Economies Struggling Under US Tariffs, Dominant State Sector

The affluent provinces of Guangdong, Jiangsu, and Zhejiang are straining to cope with the tandem pressures of an overbearing state sector and escalating tariffs imposed by the Trump administration.

The Guangzhou City skyline in Guangdong Province on May 22, 2014. VCG/VCG via Getty Images

China’s coastal provinces and cities, prime drivers of the country’s economic growth, are straining to cope with the tandem pressures of an overbearing state sector and escalating tariffs imposed by the Trump administration.

The private sector along China’s affluent coast has long been squeezed for profits and markets by the wide reach of China’s inefficient and corruption-riddled state-owned enterprises (SOEs). Tax changes set to go into effect in 2019 will saddle firms and workers with an additional $300 billion in taxes each year.

Coastal Trade Crisis

The affluent provinces of Guangdong, Jiangsu, and Zhejiang, as well as the directly administered city of Shanghai, not only play an important role in China’s economy but are also the source of its $500 billion trade surplus with the United States that Washington is targeting with current and proposed tariffs.