China: Amicable trade relations with US are key - BNPP

Analysts at BNP Paribas explain that trade relations with the US are among the key risk factors for China’s economic growth outlook this year.

Key Quotes

“While the US has not introduced any outright trade restrictions on imports from China and the threat of an immediate trade war seems to have come down substantially, concerns about adverse changes in this respect have not disappeared entirely.”

“The upcoming Trump-Xi summit on 6 April is likely to focus on the US-China trade imbalances and possibly set out plans for its resolution. Our base-line scenario is that both sides will opt for cooperation rather than confrontation, especially since the latest data point to a narrowing of the trade surplus that China runs with the US (mostly because of rising Chinese imports from the US). Even if the reduction of China’s trade surplus with the US continues, resulting in a smaller contribution from trade to China’s GDP, this loss will be compensated by the expansion of domestic demand, we believe.”