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Tag Archives: China-US relations

What should Europe expect from American trade policy after the election?

A Joe Biden Administration would have to decide to what extent to unpick the major United States trade policy shifts of the last four years. A quick return to comprehensive trade talks with the European Union is unlikely and the US will remain focused on its rivalry with China. Nevertheless, there would be areas for EU/US cooperation, not least World Trade Organisation reform. The European Union-United States trade and investment relationship remains the world’s most intensive even after...

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Why the US Trade Agreement will slow China’s economy

The response of the global financial markets to the trade agreement reached between the United States and China has been very positive, probably excessively so given the relatively limited size of the agreement reached.The positive thing about the agreement is that it allows a truce — at least partially — in the strategic competition between China and the United States. This truce comes at a key moment for both President Donald Trump and President Xi Jinping for different reasons. China...

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From globalization to deglobalization: Zooming into trade

External PublicationThis article shows some evidence of the decrease in merchandise, capital and, to a lesser extent people to people flows. By: Alicia García-Herrero Date: February 3, 2020 Topic: Global Economics & Governance After decades of increasing globalization both in trade, capital flows but even people to people movements, it seems the trend has turned towards deglobalization. This article shows some evidence of the decrease in merchandise, capital and, to a lesser...

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Stability remains key to China

The most concerning aspect for the Chinese economy will still be to hold up domestic demand. The rapidly rising household debt will put further breaks of the households' ability to purchase durable goods2019 was a challenging year for China, featuring rapid growth deceleration. Consumption growth, long perceived as the key for China’s growth resilience, moved downwards significantly in 2019. What’s more, domestic investment remained sluggish, reflecting the shattered confidence among...

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Lessons from the China-US trade truce

The tentatively agreed deal between China and the United States temporarily stops a dangerous dynamic, yet it falls far short of the negotiating objectives of both sides. US trade policy has become a dominion of the executive branch guided principally by the President’s electoral interests. Meanwhile, China demonstrates its capacity to resist pressure: it will enact structural reforms at its own pace in line with its interests. Sadly, the deal confirms that the United States no longer feels...

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Watch out for China’s currency in case of no-deal scenario

The U.S. and China’s negotiations on a phase-one deal seem to have stalled again. The market was already aware of the limited nature of the likely deal, but was still hoping for it. Against this backdrop, the investors have reacted negatively to the increased likelihood of not reaching a deal on December 15. If this is the case, the U.S. will apply additional tariffs on Chinese imports. The obvious question to address, thus, is, what can happen to China under such a scenario?We first need to...

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Why sentiment in Greater Bay Area is deteriorating, especially in Hong Kong

Lack of concrete plans affects sentiment after brief surge on announcement of Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay AreaThe slowing Chinese economy and US-China trade war are part of the reason Hong Kong’s economy is decelerating rapidly, and the recent social unrest has only aggravated the situation. Among all the uncertainties, an important announcement for Hong Kong and Guangdong province was made in February 2019, namely the Outline Development Plan for...

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Why investors should temper optimism over a China trade rally

The economy is in worse shape than in 2015 and policies to boost growth are not as effective as they once wereTuesday’s rally in the renminbi was triggered by positive noises coming from the White House, raising hopes that the US may open the door to a trade deal with China, perhaps within weeks. The market moves saw the Chinese currency at one point strengthening past the seven-per-dollar mark.But investor optimism should be tempered. The world’s second-biggest economy remains in a tight...

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The tricky link between the Hong Kong dollar and capital flows

The Hong Kong economy has been hit by a series of shocks, but it should resist taking drastic measures to keep foreign capital in the city.Hong Kong is a very special financial centre. First, it is highly dependent on Chinese financial intermediaries and corporates. Second, its currency is pegged to the US dollar through one of the tightest monetary arrangements, namely a currency board.Furthermore, Hong Kong’s economic cycle is mainly linked to mainland China but with both the Hong Kong...

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Competing Globally: Europe’s Debate Over Trade and Sovereignty

This blog is part of a series following the 2019 Bruegel annual meetings, which brought together nearly 1,000 participants for two days of policy debate and discussion.Europe faces a global test of its resolve to work together while protecting its sovereignty. Global economic relations reflect new tensions between the U.S. and China, poles that increasingly define the international agenda. The European Union, home to the world’s largest single market, has a duty to chart a new course that...

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