[Good Morning Stock Market] US-China Trade Deal Skepticism? "Still a Strong Positive Factor"

Trump Seeking Re-election, China Must Calm Economic Uncertainty... "Sincere Implementation of Trade Agreement Urgently Needed"

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[Asia Economy Reporter Minwoo Lee] Although skepticism is emerging regarding the signing of the trade agreement between the United States and China, it is still expected to be a significant positive factor. Both the U.S. and China are highly likely to implement the trade agreement and pursue additional trade agreements.

◆ Kyungmin Lee, Researcher at Daishin Securities = Even after the signing of the U.S.-China trade agreement, skepticism has arisen due to concerns such as whether the trade agreement will be implemented and the pros and cons of China expanding imports from the U.S. by $200 billion (approximately 231.8 trillion KRW). Nevertheless, both countries are likely to implement the trade agreement and pursue further trade agreements. China’s expansion of imports from the U.S. is also considered to be in a normalization phase this year. U.S. President Donald Trump is aiming for re-election in the upcoming November presidential election. Due to the prolonged U.S.-China trade dispute, public opposition to the tariff policies has increased. According to a New York Times survey, 58% responded that tariff increases are harmful to the U.S., and 40% said Trump’s trade policies are not beneficial. The U.S.-China trade agreement is seen as a key card to boost Trump’s approval ratings along with the U.S. economic recovery. From China’s perspective, a trade agreement with the U.S. is an essential condition to quell economic uncertainty. It is time to end the trade war with the U.S., increase external demand, and focus on domestic demand recovery through strong economic stimulus measures.

China has promised to expand imports from the U.S. by $76.7 billion in 2020 and $123.3 billion in 2021. China’s cumulative imports from the U.S. this year will reach $199.1 billion. However, the share of the U.S. in China’s total imports will return to around 8.7%, the level before the trade dispute. China’s immediate expansion of imports from the U.S. does not seem burdensome. Moreover, China’s import expansion from the U.S. is focused on agriculture, energy, and services sectors. The U.S.-China trade agreement is expected to have a more positive impact than a negative one on the Korean economy and stock market. Attention is drawn to the possibility of recovery in the global economy and trade.

◆ Jinyoung Choi, Researcher at Ebest Investment & Securities = The U.S.-China Phase One trade agreement is the result of an equal negotiation and is a mutually beneficial agreement. It can improve the Chinese economy while benefiting both the U.S. and the world. Major international economic organizations have stated that this agreement will bring positive effects. Recently, some have raised the 2020 economic growth forecast for China by 0.2 percentage points (p). Regarding tariffs, after October, both countries have suspended or reduced some tariffs. Trade between the two sides has proceeded normally. This will enhance cooperation between the two sides, benefit both China and the world, and stabilize global trade.