After several back and forth tariff increases, the 2 world leaders agreed on 1 December to postpone further hikes. American trade officials are due in Beijing Monday.
China is facing pressure to reach a settlement with the US.
Chinese economic growth fell to 6.5% in the Quarter ending in September.
China will stimulate its economy by cutting interest rates, further slashing banks’ RRR (reserve requirements) and asking state-controlled banks to lend more.
We believe that trade talks will result in a truce, if not a solution. A deal is certainly possible if the optics look good enough for President Trump’s 2020 Presidential campaign.
There are non-sensitive areas in which China can yield: forced technology transfers, food imports and foreign companies.
This will be a difficult year for the Chinese economy, but there is 1 positive: the plunge in Crude Oil prices will offset some of the headwinds. And China will need all the fair economic weather it can get.
Q-3 US growth was a strong 3.4% and unemployment is at a 50 year low.
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