Analysts at Rabobank remain sceptical about a major breakthrough in the trade war in the coming months as China would have to change its economic model to address those issues – something that Beijing is not prepared to do.
Key Quotes:
“President Trump said that reaching a deal with China is not a priority ahead of the 2020 presidential election. Trump said he was not interested in “a partial deal”. He also claimed that the dispute will not undermine his chances to get re-elected (something that Beijing is most likely hoping for) and that his goal is a “complete deal” with China.”
“To our mind remarks from Trump imply that he expects China to address other crucial issues: intellectual property theft, barriers to entry for foreign companies and generous subsidies for state companies. China would have to change its economic model to address those issues – something that Beijing is not prepared to do.”
“Trump's positive assessment of the US economy is one of the reasons why he does not seem to be under pressure to get a deal. Meanwhile, Trump’s chief economic adviser Kudlow remains optimistic about the prospects for the US economy. The S&P 500 Index – one of the key barometers for Trump – continues to trade close to the all-time high. Perhaps if there is a major sell-off in excess of at least 10%, Trump will adopt a different approach.”
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