Trump: What to expect on US-China economic relations

HONG KONG - While the outcome is uncertain, it is clear that incoming President Trump’s attempts to shake up current bilateral relations between China and the U.S. will be a key theme for 2017 globally, says global asset manager Natixis.

“We expect that China will take a wait-and-see approach, especially in front of the 19th National Congress of the NPC later this year,” Natixis says.

“However, as the U.S. shies away from multilateral or regional trade agreements, such as TPP, China will quickly fill the space. Regional trade agreements within Asia, such as RCEP, will be the platform for China’s trade vision.”

On foreign direct investment, Natixis says longstanding negotiations for a bilateral investment agreement between the U.S. and China are doomed to fail.

“Repatriation of earnings from U.S. multinationals will hit China at time when it most needs foreign capital to reinvest revenue,” it says, adding that repatriation could further worsen capital outflows from China.

“Trade protectionism and reshoring are clearly on Trump’s agenda.

“For the former, the starting point will be weakening, or even dismantling, NAFTA, but China is clearly second in the game.”  www.natixis.com (ATI).