2019 was a terrible year for global trade. According to the World Trade organization’s latest forecast, it likely only grew by 1.2 percent! the weakest year since right after the global financial crisis in 2008. But the trade war didn’t deter investors from stocks. Stock markets in China and the u.s. soared with the S&P 500 clocking its biggest one-year gain in six years.
At a panel discussion hosted by the National Committee on U.S-china relations in New York a leading economist said the US stock market was helped in part by the Federal Reserve, by cutting interest rates by 75 basis points when most expected rate hikes in 2019.
It’s monetary policy, but also we have to remember that the US economy has been doing very well even in the face of a collapse of trade at the global level, so the US economy has been outperforming the rest of the world, so other investors in other parts of the world have been coming in and taking advantage of that.
Nevertheless, the economic growth as measured by GDP did slow in both the US and China in 2019.
< The reason why we’re having problems at the moment is because the economy is entering into a new phase of development in the past we just rely on the low-cost advantage and the low end of manufacturing so it’s more like a simple expansion of for the economic activities now we need to rely on more more innovation industrial upgrading > – Ministry of Finance of the People’s Republic of China.
The World Bank expects GDP growth in China to slow slightly in 2020 to 5.9 percent the panel discussion comes less than a week before China’s top trade negotiator “Lou hae” is set to arrive in Washington DC to sign phase 1 of a new trade agreement that many hope will improve relations between China and the US. The exact terms of the deal have not been revealed but the US has suspended additional rounds of tariffs as well as reduced existing tariffs and hopes China will commit to buy more US agricultural products.
This does give the United States the opportunity to say okay, the politics can accommodate deal-making and being constructive and not just focusing on the zero-sum kind of nature of things. Experts say it’s a good start but not the end of what will likely be a long discussion on trade in 2020.
The United states is doing its best to avoid the trade war! China not!