US-China trade frictions surfacing - Nomura

Analysts at Nomura explained that today, some twenty years later, China has a mighty economy. 

Key Quotes:

"At the same time, many US companies are feeling that they are no longer welcomed in the Chinese market. But this sort of outcome runs the risk of tripping the devastating landmine of opposing political systems that Deng Xiaoping did everything to avoid."

"Additionally, whereas the US-Japan trade frictions of the 1980s took place after Japan had joined the ranks of the advanced economies, today’s disputes between the US and China are happening even though China remains a developing economy. China’s per capita GDP is currently a little over $8,600, which means the authorities must now figure out how to escape the so-called middle-income trap."

"The economy could stall if trade frictions with the US delay the nation’s escape from this trap. For this reason as well, China will need to be more careful in addressing trade frictions with the US going forward."

"The Chinese president may already be aware of these issues. On 10 April, at the Boao Forum for Asia, Mr. Xi emphasized his intention to forge ahead with market-opening measures."

"But the problem of opposing political systems has deep roots, and I think resolving it may force the Chinese leader to channel his inner Deng Xiaoping."


© FXstreet

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Wednesday, 23 January 2019

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