Date: December 16, 2019
Trump Trade Deal Buys Xi Time Before Next U.S.-China Battle
“For Chinese President Xi Jinping, the phase-one trade deal with U.S. President Donald Trump isn’t exactly a reason to pop open the champagne. After months of arduous negotiations, false starts and dashed hopes, the agreement announced on Friday night helps steady a relationship in free-fall. While that’s important for Xi, who has faced rumblings of discontent as the economy grows at the slowest pace in almost three decades and protests in Hong Kong rage with no end in sight, it’s at best a temporary respite.”
Worst U.K. Manufacturing in Seven Years Tests Johnson Pledges
“U.K. manufacturing production suffered its worst month in more than seven years in December, increasing the chances that the economy as a whole will contract this quarter. The disappointing survey may reflect some nervousness in the run-up to last week’s U.K. election. Prime Minister Boris Johnson’s decisive victory in the vote removes some near-term concerns, though a myriad of questions remain over the U.K.’s future relationship with the European Union. If that undermines growth, that could impact Johnson’s plans to both increase spending and keep control of the deficit.”
China Gets Twin Boost From Trade Deal, Better November Data
“The pickup in China’s economy in November adds to the optimism from the trade deal announced last week, though plenty of downside risks remain as the nation heads into 2020.Industrial output and private consumption were both much stronger than expected, with production jumping 6.2% from a year earlier and retail sales climbing 8%, data released Monday showed. At the same time, fixed-asset investment in the first 11 months of this year grew at 5.2%, the slowest pace since at least 1998. If the trade deal is signed early next year as the U.S. has indicated and tariffs on some Chinese goods are lifted, it would go some way to dispel some of the uncertainty that has been hanging over the economy. Domestically, policy makers still face questions about the sustainability of debt and rising defaults, but the government has emphasized policy stability and there is little chance of a change until at least March next year, when authorities meet to approve 2020’s broad policy guidelines.”
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