While trade tensions between the U.S. and China are starting to loosen, it isn't stopping Chinese factories from reducing prices, workers and investment.
According to a UBS Group AG survey, 86 percent of companies have been affected by U.S. tariffs. Most companies plan to diversify into less trade-heavy sectors, although, they don't expect to fully offset weaker demand.
Of those surveyed, 68 percent reported cutting prices on products subject to levies, while 27 percent have slashed capital expenditures. Adding to that, 23 percent said that they have had to lay off staff and 18 percent reported cutting wages.
Industry Week reports that a squeeze on corporate margins and employment is threatening to slowdown China's economy. The temporary truce between the U.S. and China only allows tariffs of less than 15 percent on products.
Analysts continue to expect the trade war to escalate in the new year, predicting that export growth will slow to 4 percent. Companies will be forced to continue to cut prices and layoff more workers. Additionally, the Chinese government has rolled out measures that include tax breaks and subsidies to cushion the impact of tariffs, according to Industry Week.