China-US tensions pose biggest risk to Chinese economy in the second half of 2020, analysts say
- The biggest downside risk for China’s economy this year is escalation of US-China tensions, analysts say
- Phase one trade deal signed in January seen as the single positive thread in bilateral ties, but even that is showing signs of fraying
Despite a new outbreak of coronavirus infections forcing authorities to lockdown swathes of Beijing and raising concerns about a second wave of infections throughout China, the deteriorating US-China relationship is now the biggest threat to the Chinese economy, analysts have said.
But the nation’s relationship with the United States has been getting progressively worse as the pandemic has spread worldwide and is currently at its lowest ebb in decades.
“Absent a significant second wave of the virus, the biggest downside risk is escalation of US-China tensions,” said Bo Zhuang, chief China economist at TS Lombard, a research house.
The China issue will always be an important topic during the US presidential election, which could cause disruption in the Chinese economy
“There have been no mass manufacturing lay-offs. As a result of the better-than-expected export growth in April and May, the labour market held up more strongly than we had expected,” Zhuang added. “We believe that China is on track to post low positive growth of 1 per cent in the second quarter. Thus, we stick to our forecast for overall [gross domestic product] growth in 2020 at 2 per cent.”
