Forget the trade war, the Chinese economy has other big problems

Beijing is already grappling with other problems that the trade war could exacerbate. The Chinese economy is currently growing at its slowest pace since the global financial crisis. He is heavily indebted and faces concerns about the real estate bubble and the weakening of the currency.

Despite the new Trump administration tariffs on 200 billion US dollars Chinese products, exports continue to grow strongly, up 16% in October. However, that could change in the coming months if tariffs went from 10% at the end of December to 25%, as threatened by the United States, adding to China's growing list of problems.

The Chinese economy has expanded rapidly in the years following the global financial crisis, thanks to repeated debt crises.

Some of this money was spent on building bridges, roads and other infrastructure. But many have ended up in less productive sectors of the economy, such as large, inefficient, state-run enterprises. The more dynamic private sector has not benefited so much.

At the end of last year, Beijing has redoubled its efforts to reduce the high level of debt, which is one of the main reasons why the economy is losing momentum.

Some analysts are skeptical about the Chinese government's commitment to clean up its financial system, especially as the slowdown deepens and the trade war intensifies.

According to Kevin Lai, an economist at the investment bank Daiwa Capital Markets, many provincial governments and state-owned enterprises would struggle to stay out of the water without regular cheap credit injections.

Cutting their lines of credit "would have very negative repercussions, such as social unrest, layoffs and bankruptcies," said Lai. It's a scenario that Beijing wants to avoid.

Diving currency

The weakness of the yuan has boosted China's huge export sector by making Chinese products cheaper on world markets. But depreciations of the yuan have already caused headaches.

In the midst of sharp declines in 2015 and 2016, large sums of money poured in from China as investors were betting that the yuan would continue to fall. The crisis has forced Beijing to spend hundreds of billions of dollars to support its currency.

A rapidly declining yuan could become a vicious circle, according to Manu Bhaskaran, founder of the Singapore-based Asia Centennial Research Society.

"There could be a massive outflow of capital and that could feed," he said.

Beijing appears to have once again started to tap into its massive mass of war currencies in recent months to slow down the yuan's declines, according to research firm Capital Economics.

Real estate bubble

Another threat threatens the country's overheated real estate market.

Prices have more than doubled over the last decade, according to research firm Gavekal, exacerbated by low interest rates and housing shortages in major cities.

But the real estate market "seems to have cracks," said Aidan Yao, senior emerging market economist at AXA Investment Managers. He pointed out some examples of large real estate developers having reduced their prices in the face of weakening demand.

"It's only a matter of time before the market gets cold," Yao added.

According to analysts at research firm Fitch Solutions, the real estate sector has been one of the few hotspots in the Chinese economy this year.

Chronic problems

"China's problems are chronic and not acute," said Derek Scissors, a Chinese expert from the American Enterprise Institute, a Washington-based think tank.

But these movements have arrived too late or do not go far enough, which raises serious concerns about China's long-term economic future, according to Scissors.

"The old indebted economies do not grow," he said