US-China trade: The impact in numbers

Chaoping Zhu, Shanghai-based Global Market Strategist for J.P. Morgan Asset Management, says that if the U.S. does apply 10% tariffs to Chinese exports worth US$200 billion, this will equate to an estimated 0.2 - 0.3 percentage point decline in Chinese GDP growth.
There are several inherent risks, he says:
 1) Global investor confidence may be hurt, leading to slower capital inflows;
2) Multi-national corporations might reallocate their supply chains out of China, making it difficult for China to improve its technology and long-term productivity; and
3) Financial risk may rise since Chinese exporters rely heavily on debt in their business.  
But Zhu believes China has room to counter any economic slowdown with monetary and fiscal policies.
“Deleveraging measures undertaken in the past two years have tightened liquidity conditions, temporarily suppressing infrastructure investment by local governments — and property purchases by urban households,” he says.
“Yet these demands remain strongly intact, suggesting investment could grow quickly as a result of monetary and fiscal stimulus, much as we saw in 2009.”
Zhu says short-term growth would come at the cost of soaring credit risks, posing dangers.