While it is evident that the American economy has surged ahead – partly because of the massive tax cuts and the “America First” agenda by its President Donald Trump, but the impact of those policies on some of the other comparable global economies would become evident in upcoming data.
The policies of Trump and his attempts at changing the order of global trade – especially targeted at China, have created some flutter in the global economy. Determined to level up the US trade imbalance with China, he has already imposed import tariffs on Chinese goods worth over $500 billion, with retaliatory measures by China.
A fresh round of talks on trade that was ot be held between the two side – US and China, failed to take off amid imposition of tariffs and retaliatory tariffs and many are now expecting this trade war to last a long time. This has brought in an environment of gloom over the global economy which is already evident in the strengthening of the US dollar and resulting significant falls in the emerging market currencies.
A Reuters poll on the trade conflict conducted on 70 economists in mid September showed that all of the economists believe that the US economy would suffer because of the trade conflicts. Further, all of them also agreed that the fate of the euro zone has been threatened by the U.S.-China trade war. And the manner in which the Chinese economy has been impacted by the trade war could become evident in economic data to be released next week.
“One eye will also be on China next week as markets attempt to assess the latest economic data for signs of any impact from trade disagreements with the U.S.,” said Ryan Djajasaputra at Investec.
The anticipated data sets include purchasing managers’ (PMI) surveys of services firms and trade and credit releases.
Ther4e has been a slowdown in the Chinese economy and according to a preliminary Reuters’ poll, economists expect a further slowing for the September data due on Oct. 12 which is likely to show a growth rate of 9.1% in dollar-denominated exports compared to 9.8% for August.
The trade balance data would also be published by Beijing on the same date which will show its trade balance with the US as well – an issue that has been very sensitive politically. If there is not much a difference in the balance of trade with the US, Trump might become stricter in his attempts to reduce the balance of trade with the second largest economy of the world.
“It seems likely that a U.S.–China trade war will result in nearly all Chinese imports into the U.S. facing 25 percent tariffs next year, with U.S. exports to China also subject to higher tariffs,” economists at Credit Agricole told clients.
Amidst such an environment of trade conflicts, China is trying to support its economy with implementation of stimulus measures, which includes easing of its monetary, credit, fiscal and regulatory policies.
The aim of policymakers in China is to reduce the cost of funding for businesses, increase bank debts for smaller businesses, tax cuts and reliefs and speeding up of more infrastructure projects. And in order to inject more liquidity in the Chinese economy, the reserve requirement for Chinese banks have been cut three times this year by China’s central bank.
“We expect fiscal policy to remain supportive. Monetary policy should also remain accommodative,” Credit Suisse economists told clients.
Weakening of both external and domestic demand resulted in a slacking of growth in China’s manufacturing sector for September. This has increased the concerns of the policy makers because this appears to be a direct impact of the US and Chinese tariffs.
(Source:www.reuters.com)
The policies of Trump and his attempts at changing the order of global trade – especially targeted at China, have created some flutter in the global economy. Determined to level up the US trade imbalance with China, he has already imposed import tariffs on Chinese goods worth over $500 billion, with retaliatory measures by China.
A fresh round of talks on trade that was ot be held between the two side – US and China, failed to take off amid imposition of tariffs and retaliatory tariffs and many are now expecting this trade war to last a long time. This has brought in an environment of gloom over the global economy which is already evident in the strengthening of the US dollar and resulting significant falls in the emerging market currencies.
A Reuters poll on the trade conflict conducted on 70 economists in mid September showed that all of the economists believe that the US economy would suffer because of the trade conflicts. Further, all of them also agreed that the fate of the euro zone has been threatened by the U.S.-China trade war. And the manner in which the Chinese economy has been impacted by the trade war could become evident in economic data to be released next week.
“One eye will also be on China next week as markets attempt to assess the latest economic data for signs of any impact from trade disagreements with the U.S.,” said Ryan Djajasaputra at Investec.
The anticipated data sets include purchasing managers’ (PMI) surveys of services firms and trade and credit releases.
Ther4e has been a slowdown in the Chinese economy and according to a preliminary Reuters’ poll, economists expect a further slowing for the September data due on Oct. 12 which is likely to show a growth rate of 9.1% in dollar-denominated exports compared to 9.8% for August.
The trade balance data would also be published by Beijing on the same date which will show its trade balance with the US as well – an issue that has been very sensitive politically. If there is not much a difference in the balance of trade with the US, Trump might become stricter in his attempts to reduce the balance of trade with the second largest economy of the world.
“It seems likely that a U.S.–China trade war will result in nearly all Chinese imports into the U.S. facing 25 percent tariffs next year, with U.S. exports to China also subject to higher tariffs,” economists at Credit Agricole told clients.
Amidst such an environment of trade conflicts, China is trying to support its economy with implementation of stimulus measures, which includes easing of its monetary, credit, fiscal and regulatory policies.
The aim of policymakers in China is to reduce the cost of funding for businesses, increase bank debts for smaller businesses, tax cuts and reliefs and speeding up of more infrastructure projects. And in order to inject more liquidity in the Chinese economy, the reserve requirement for Chinese banks have been cut three times this year by China’s central bank.
“We expect fiscal policy to remain supportive. Monetary policy should also remain accommodative,” Credit Suisse economists told clients.
Weakening of both external and domestic demand resulted in a slacking of growth in China’s manufacturing sector for September. This has increased the concerns of the policy makers because this appears to be a direct impact of the US and Chinese tariffs.
(Source:www.reuters.com)
