US-China deal ‘imminent’ with Beijing’s upcoming policy meeting

December 11 17:10 2019
US-China deal ‘imminent’ with Beijing’s upcoming policy meeting

China’s annual Economic Work Conference will likely hold in the next couple of weeks. The global perception is that a trade deal with the U.S. is “imminent,” according to ICBC Standard Bank Chief China Economist Jinny Yan.

The world’s two largest economies are seemingly working toward a “phase one” trade deal, with the President of the U.S. saying on Tuesday that negotiators were in the “final throes” of talks.

The next tariff deadline falls on December 15, which will be followed by additional U.S. levies on Chinese exports. This would translate to apply a 15% rate to a further $160 billion worth of Chinese goods, with the U.S. looking adamant to relax the tariffs if no deal is made before the deadline.

“The key priority for (Chinese President) Xi Jinping and policymakers across China is stability, so anything that overthrows stability is going to be essentially a concern,” Yan told CNBC’s “Squawk Box Europe” Wednesday.

“That includes Hong Kong, the U.S.-China situation, and that is why a phase one deal is absolutely crucial.”

The Economic Work Conference is a closed meeting of policymakers held over two or three days in the second or third week of December. The meeting sets the national agenda for China’s economy and its finance and banking sectors for the following year.

Yan suggested that owing to this coinciding with the key tariff deadline, she believes “the trade deal is imminent.”

China’s industrial profits fell 9.9% in October year-on-year. This is according to data released by the National Bureau of Statistics on Wednesday.

However, Yan suggested that the slowdown in China is driven primarily by a slump in domestic consumption, rather than the trade war.

“That has been seen in the previous year or two because we are seeing disposable income growth slower than actual GDP growth, so whilst most people are worried about GDP growth, what we should really be worrying about is actual income growth in China,” she added.

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