Stock and Real Estate Slump Already... Another Reason Chinese Investors Lose Sleep at Night

Trump's Return to Power
Some Claim He Is Better Than Biden

Trump Photo by Yonhap News

Bloomberg reported on the 4th (local time) that the possibility of a "Trump second term" has emerged as the biggest risk factor that Chinese investors are most alert to this year.

According to Bloomberg on the day, at meetings held last week in Beijing and Shanghai by Goldman Sachs, Chinese institutional investors such as mutual funds, private equity funds, and insurance asset managers cited the sluggish stock market, real estate downturn, and economic slowdown, as well as the "Trump second term" as a factor keeping them awake at night this year.

Goldman Sachs economists Maggie Wei and Hui Shan stated in a joint memo, "The most frequently asked question by local investors was about the impact on China if former President Donald Trump becomes the next president."

Chinese investors fear a new large-scale economic attack on China if former President Trump is re-elected. Trump is reportedly considering imposing tariffs of over 60% on all Chinese imports if he returns to office.

Some analyses suggest that Chinese investors might actually dislike a "Biden 2.0" even more.

David Firestein, chairman of the George W. Bush U.S.-China Relations Foundation, said, "President Joe Biden not only accepted former President Trump's policies but actually doubled down on them," adding, "It is understandable why China might be very pleased with the prospect of a Trump victory in 2024." He also noted, "It is questionable how seriously China will take Trump's new tariff policies."

However, the prevailing view is that regardless of who wins the November election, the U.S. approach to China in areas such as investment, technology transfer, and trade will remain the same as before.

Chinese investors appear to be betting on a negative outlook for the Chinese economy this year. When Goldman Sachs asked respondents to rate this year's outlook on a 10-point scale (0 representing the difficult 2022 due to COVID-19 lockdowns, and 10 representing the strong stock market performance in Q1 of last year following China's reopening), 6 out of 12 respondents answered 0. The other half averaged only 3 points.