China

Economic damage caused by corona virus should remain limited

From a medical and human point of view, the outbreak and rapid spread of the new corona virus in China and beyond its borders is certainly very regrettable and worrying. From an economic point of view, however, the damage should be limited at present. This should be due not least to the rigorous crackdown by the Chinese authorities and their – unlike during the SARS epidemic 17 years ago – almost astonishingly transparent information policy. A comparison with the spread of SARS in the winter of 2002/03 and its economic consequences is, of course, obvious at present. At that time, consumption in China collapsed, and passenger air travel also declined significantly. In neighbouring Taiwan, Singapore and Hong Kong, economic output shrank. At that time, however, the Chinese authorities had kept information about the outbreak of the epidemic under wraps for as long as possible. During this time, the virus was…

China: Downturn pauses, but US deal is not a stimulus package

  The economic downturn in China lost much of its sharpness at the end of 2019. Economic growth did not lose further momentum in the fourth quarter. At an unchanged 6.0% (y/y), the current growth rate is not only in line with market expectations but also just within the growth range set by Beijing – this is still a political issue in China. Certainly, the de-escalation in the trade dispute with the US and the hope for at least a partial settlement have played their part in easing the downward pressure on the Chinese economy. Even if US President Trump initially only took further tariff increases off the agenda, this has given China’s export industry a breathing space in recent months. However, the economic stabilisation does not appear to have been entirely without government stimulus. This suggests the marked acceleration in industrial growth at the end of the year, which…

No end to uncertainty yet

Uncertainty remains the determining factor for the economy and financial markets. The Brexit and the US-Chinese trade dispute, two of the most important political issues, may have come closer to a solution in the last few days. However, it is not yet clear where the journey is heading. As for the week ahead, important economic data is expected from both sides of the Atlantic. Economic growth in both the euro zone and the United States is likely to have slowed again in the third quarter. Investment in particular is suffering from continued uncertainty, while companies remain cautious in the face of a lack of clarity regarding future prospects. Growth in the euro zone is likely to have been considerably weaker than in the USA, and between July and September it was only just above zero. Industry in particular is suffering as a result of the international pressures. This is particularly…

Trade dispute slows China’s economic growth

The Chinese economy lost further momentum over the summer months. Economic growth in the third quarter was again lower than in the previous quarter, falling to a new 27-year low of 6.0 percent (y/y). Market estimates were thus slightly missed, but our own somewhat more sceptical expectations came true. The downward trend that began at the beginning of last year with the outbreak of US-Chinese trade disputes has continued. The largest growth losses occurred in industry, which recorded its lowest increase since 1990 in the past quarter at 5.0 percent. This figure would have been even weaker if industrial production had not picked up visibly in September, the month that ended the quarter. We remain cautious, however, as to whether this will signal a reversal of the industrial downturn. On the contrary, as in the course of the year to date, this could conceal government measures that have been brought…

Rare earths: Beijing’s pledge of fist

  China exported so few rare earths in September as it has not done for more than two years. Australia, on the other hand, intends to significantly expand its exports of rare earths in the near future, with sales in the United States in particular set to increase. The USA is currently working on a cooperation agreement with Australia to promote the production of rare earths. This is intended to make the worldwide, but above all the US demand for the important metals more independent of the Chinese supply supremacy. For there is great concern that Beijing could impose an embargo on the export of raw materials against the USA, thus using its dominant position as a „weapon“ in the trade dispute – even if the two sides have recently come a little closer to settling the conflict. Rare earths are indispensable for today’s technologies, although metals are only needed…

Much ado about nothing? Trump announces partial agreement in trade dispute with China

China and the United States seem to be heading for a partial solution to the trade dispute. The talks between the two countries, which resumed last week, have at least brought a first success. However, in the past two years, in which the conflict gradually escalated, an agreement had often come within reach. But it failed time and again because of unacceptable or hardly realizable demands on both sides and ultimately also because of the volatility of Donald Trump. This cannot be ruled out this time either. According to the US President, the core of the partial agreement is the willingness of the Chinese to purchase American agricultural products worth between USD 40 billion and USD 50 billion per year. The solution will also include higher imports of Boeing aircraft with a volume of up to 20 billion US dollars. In addition, there is said to have been an initial…

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