Trade War deal and the income multiplier

CHINA ADVISORY - Report 23 Jan 2020 by Andrew Collier

Despite relatively benign recent economic data, we expect a rising negative impact on China’s economy as a result of the existing tariffs. Exports are likely to continue to decline accordingly due to existing US tariffs on Chinese goods. We anticipate continuing problems for the Chinese economy because of declining investment, postponed purchases, and a dampened income multiplier.

In addition, China is unlikely to be able to live up to its purchasing agreements, which means that tariffs will remain in place or increase under the Trump administration. This will be a continued drag on the Chinese economy.

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