Arjen van Dijkhuizen, senior economist at ABN AMRO, suggests that it is difficult to predict how the negotiations between the US and China will proceed.
Key Quotes
“Any short-term deal will not mean that tensions between the two giants will fully fade, certainly not on the technology front (as the 5G/Huawei casus shows). Strategic competition between a status-quo power (US) and a rapidly emerging power (China) is a natural phenomenon and will linger on. That said, we are still of the view that there are certain checks and balances that should prevent escalation from going too far.”
“Strong negative effects on US stock markets or the US economy (which we expect to slow in 2019-20) are not welcome to president Trump, who wants to be re-elected next year. And for China, it certainly does not want a prolonged economic war with its largest export partner.”
“All in all, we think a full breakdown of negotiations is still not very likely. Talks may resume in the run-up to a potential Trump-Xi meeting late June (a US delegation is said to travel to China again, although no time schedule has been mentioned yet). That said, at this stage we cannot have a strong conviction on this: at the moment the only certainty we have is that uncertainty is here to stay for a while.”
Share
