Asia Week Ahead: China Back In Limelight

The key question of the week will be whether the forthcoming round of US-China trade negotiations bears out President Trump’s recent positive rhetoric on a trade deal.

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Next round of China-US trade talks

The Chinese markets will be back from the ‘Golden Week’ Lunar New Year holiday, though players are likely to tread a cautious path, taking cues from the January economic data and progress on the US-China trade talks.

Will the forthcoming round of the US-China trade negotiations bear out President Trump’s recent positive rhetoric on a trade deal?

The delegation led by US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer will hold trade negotiations with their counterparts in Beijing next week. As in the last high-level meeting in late January (attended by China’s Vice Premier Liu He), we may hear about some more trade concessions from the Chinese side, though the most contentious issue about technology theft and intellectual property rights will continue to linger. Moreover, any major announcements, positive or negative, might well be withheld until after the Trump-Xi meeting in Vietnam at the end of the month.

Meanwhile, China’s January data calendar is shortened as the National Bureau of Statistics holds back the release of some indicators (industrial production, fixed asset investment, retail sales) deemed to be distorted by the timing of the Lunar New Year holiday, which either falls in January or in February. So far, signals have been mixed – the manufacturing economy continues to be weak while services are holding up. We will be watching the trade and monetary data to see the impact of the trade war and for signs of stimulus.

More trade releases elsewhere

India, Indonesia, the Philippines, and Taiwan also report their trade figures next week. All will be scrutinized for clues about the impact of the trade war. But it’s not just the trade war. The ongoing downturn in global electronics demand has already started to depress regional exports. A steeper decline in Korea’s exports in January suggests we can expect the same from Taiwan.  

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