Call for policy support
According to CN Wire, the economists of Goldman Sachs underlined the need for policy support, which states:
“Beijing needs to reduce the more target in the quarters coming, given the domestic demand and the weakness in the labor and property markets continues.”
Economists said:
“Economic weakness is the result of a combination of factors, including heavy rainfall and floods in the first half of August, local restrictions on construction in Beijing and the surrounding cities before the military parade, long -term recession in the property sector and government cracks on value wars.”
Trade negotiations in focus
Weak Chinese economy comes at a significant time as the US administration asks other countries to increase tariffs to put pressure on China to import Russian oil to China. Mexico has also changed the screw, announcing plans for 50% tariffs on the automakers.
Running with high-level trade talks, low American tariffs can be important to reboot industrial production and reduce margin pressure. However, risk remains, as stagnant interactions, 100% European Union tariffs on Chinese goods, and 50% of Mexican Levy on auto can give more stress to external demand.
Progress but uncertainty
The updates of trade talks were excited, US Treasury Secretary Scott Besent reportedly said:
“The next US-China talks can result in another 90-day roll-over of tariffs, possibly it will be before the November 10 deadline. Chinese dialogues are difficult, but realizing that they have 3.5 years to de-raise American business relations to avoid a decouting.”
Meanwhile, China’s chief trade negotiator Lee Chengung reportedly stated that he arrived on a framework agreement on Tikok. However, he warned that China would not renounce interest in firms to reach an agreement. President Trump is going to talk with Chinese President Xi Jinping on Friday, September 19, 19 September.
Will Beijing agree to cut Russian oil imports in exchange for low tariffs? The question grew up after the Shanghai Cooperation Organization (SCO) summit in early September, which was attended by Chinese President Xi Jinping, Russian President Vladimir Putin and Indian Prime Minister Narendra Modi.
Beijing used the platform to dilute the US rights on global trade and pursue a strong demand for Chinese goods. While there is no possibility of a Beijing U-turn on foreign policy, this is not completely impossible.
Beijing’s policy direction
On Wednesday, September 17, MPs organized a briefing to discuss ways to promote service consumption. It follows the ongoing trade talks, where it can be important to address the price competition and to carry forward the transition towards a consumption-operated economy.
CN Wire described the major article of President Xi Jinping on advancing the national integrated market, published in Kushi magazine, including:
- Improve the competition of disorganized low price between enterprises.
- To promote systematic exit of old abilities.
- Improving fiscal systems, statistical structures and credit mechanisms to promote market unity.
- Rewriting in ‘chaos’ in local practices to attract investment.
- To focus on addressing effectively serious invoice.
- Lroading exports in domestic sales.
The agenda of President Jinping, promoting domestic demand, suggested increasing more pressure on policy makers.
Mainland stock market firm hold
Despite deepening the cracks in the economy, the mainland equity markets continued their grounds.
The CSI 300 and the Shanghai Composite Index has obtained 15.2% and 15.18% YTD, mirringing the NASDAQ Composite Index (15.73%). Meanwhile, the Hang is the way to the Seng index, increases 31.84% YTD, as the mainland and foreign investor targeted China focused on stock.
Despite the strong benefits, negative risk erupted. Trade development, China’s housing market, and weak demand are important concerns for traders.
An extended tariff exposes more job losses to China’s homes by and cooling into demand and cooling in demand. Increasing unemployment can reduce private consumption, weighing on risk property.
On the other hand, policy measures targeting the housing sector and an American-China trade agreement can promote emotion. A business deal with low tariffs can re -awaken the external demand and reduce margin pressure. Improvement in margin can lead to employment generation and domestic consumption can promote.
