The impact of Sino-US trade conflict on Chinese Manufacturing: Evidence from Time Series Model

Abstract

In April 2018, the trade conflict between China and the United States broke out, and major economic markets in China were hit. As an industry that dominates China's stock market, China's manufacturing industry's index fluctuations are enough to attract attention. It is even related to whether the Chinese government needs to implement corresponding strategies for it. In order to explore the impact of the Sino-US trade conflict on China's manufacturing market, this paper uses GARCH and ARMA-GARCH model to estimate this shock. From the estimation results of exogenous variables, it can be seen that in the long term, the US imposition of tariffs on China has no significant positive impact on the volatility of China's manufacturing industry. These results prove that China's economy still has a considerable degree of anti-risk capability in the long term in the face of external shocks. Therefore, the Chinese government does not need to worry too much about the impact of tariff increases on Chinese manufacturing.