Forensic Insights and Market Intelligence on Greater China
On the face of it, China seems one of the safest EM country at a time of increasing currency volatility due to the Fed rate hike cycle. China has stabilized its foreign exchange reserve to above 3 trillion USD since mid-2017 while maintaining a trade surplus of over $400 billion in 2017. Yet, unbeknownst to many analysts, China’s external debt, including borrowing from offshore banks and international debt issuance, has grown extremely fast.
As several rounds of trade negotiations failed and as the U.S. and China imposed tariffs on hundreds of billions of goods, we take a hard look at the trajectory of U.S.-China trade war in the coming months.
After the imposition of tariffs on an additional $200 billion dollars of Chinese goods, analysts around the world are scrambling to figure out how these tariffs may impact the Chinese economy. We at Spectrum take the unconventional view that while the direct impact of the tariffs would remain modest, the indirect impact from further slow-down in investment in the industrial sectors would constitute another drag on the economy.