Will The US China Trade Deal Make it to Phase 2

Matty-Sways

As China inks phase one of the trade deal they face shrinking growth and commitment to purchase more than ever before.

Phase One of the US - China Trade Deal was signed and one of the promises China has made is to purchase $2 Billion of goods and services in the next 2 years. A trade truce may have reduced a key source of anxiety for the Chinese government, but leaves them in a position where they need to boost consumer and business confidence as the country faces more downward pressure on its massive economy.

On Friday, Chinese officials said the country grew in 2019 with an official economic growth of 6.1%, its lowest level in nearly 3 decades. The government aims for a range of 6% to 6.5%, However the future outlook does not show much let up, and some private-sector economists warn that growth in China could drop below 6%.

Trade, investment, consumer spending and business confidence are all on retreat, economists calculate the trade war, coupled with slower global growth, shaved 1% off China’s 2019 GDP figure.

The two sides this week took steps to settle the dispute with an agreement by China to import more from the U.S., but the US has made it clear that tariffs will linger on at least to the end of this year.

Last year’s GDP expansion, to $14.23 trillion, was roughly the equivalent of adding an Indonesia-sized economy to China’s, a year after tacking on an Australia-sized one. Markets did more than hold up last year, with the Shanghai Composite Index rising 22% and the yuan edging 1.3% higher against the U.S. dollar.

“China remains the engine of the global economy with sufficient growth momentum,” Ning Jizhe, told reporters.

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