While the domestic consequences of this week’s shutdown of the United States federal government are clear, analysts said the implications for China may take longer to surface and could be more mixed, as trade talks appear likely to continue between the two countries despite the stalemate in Washington.
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“We don’t expect the immediate impact on China to be too pronounced,” said Lynn Song, chief economist for Greater China at ING Bank.
“One thing to watch in the event of a lengthy shutdown could be how this may affect the US-China negotiations, as the November deadline for the current tariff ceasefire approaches.”
He added that past shutdowns have not had a consistent effect on China’s exports to the US, with a decline reported during the 2018-19 shutdown but an uptick recorded during the one in October 2013.
The US federal government’s first shutdown since 2018 began on Wednesday after Senate Republicans and Democrats failed to pass a bill funding government services through October and beyond. Most government functions have been paused, and hundreds of thousands of federal workers have been put on leave until the impasse is resolved.
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“I think it’s too soon to say how it would impact negotiations with China,” said Alfredo Montufar-Helu, managing director at Ankura Consulting’s GreenPoint Business.
