In this second blog in the Views on 2020 series from #Refinitiv, as China’s economy enters 2020 with the focus still on the U.S. trade dispute, slowing growth, and continued Belt and Road expansion, we present five trends for the year ahead.
- Analyzing China’s economy and market performance in 2019 was made more challenging by factors including the U.S. trade dispute and social unrest in Hong Kong.
- China’s economy in 2020 is still expected to outperform U.S. growth, albeit at a slower rate than the heady levels seen in previous years.
- Refinitiv’s commitment to delivering robust and complete China market data in 2019 included the launch of our China Price Discovery and BRI Connect apps.
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The ongoing China-U.S. trade dispute, expansion via the Belt and Road Initiative (BRI), social unrest in Hong Kong, and slowing growth make analyzing China’s economy a multi-faceted undertaking in 2019.
The key challenge for investors has historically centered on a lack of reliable data with the breadth and depth to support sound analysis.
Making informed decisions depends on comprehensive, reliable information, which is why additional data sets and new apps from Refinitiv can highlight the opportunities and risks presented by the region.
During 2019, some of the key themes that have played out in China markets have included:
China’s slowing economy
The dramatic growth of China’s economy over the last decade has been followed by a marked slowdown. Research suggests that growth may have been slowing as far back as November 2017, although foreign direct investment has shown no sign of abating.
Ministry of Commerce figures reveal that foreign direct investment in China expanded by 7.3 percent year-on-year in the first half of 2019, with July showing an increase of 8.7 percent.
And while the economic slowdown has been significant in terms of year-on-year growth, in real terms China is still outperforming many of its global counterparts.
U.S. trade tensions
U.S.-China trade tensions have continued to play out over the course of 2019.
One of China’s retaliations has involved devaluing the renminbi, with the currency depreciating to compensate for the effective value of the tariffs threatened and imposed on China.
Further Chinese strategies to limit the fall-out have involved increased trade with markets such as Europe and Japan, and the introduction of domestic subsidies to offset the impact of tariffs.
China has also undertaken targeted monetary easing to relieve high debt servicing costs, as well as outsourced manufacturing to other countries to avoid tariffs, and reduced its own tariffs on goods imported from countries such as Canada.
Watch: China’s Economy After Four Decades
2019 also witnessed progress by China in opening up its markets to international investors. Most significantly, this saw the launch of Shanghai-London Stock Connect, allowing global investors to benefit from China‘s growth through the London market.
In addition, President Xi Jinping eased restrictions on foreign shareholding ratios in domestic banks and financial asset management companies.
Other key developments included the relaxing of trade rules by China’s Financial Futures Exchange, which reduced margin requirements, cut fees and allowed more trading activities.
China’s economy in 2020
Looking ahead in 2020, five key trends we anticipate include:
- China’s economy will continue to grow, albeit at a slower rate than the heady levels of the last few years. Some market commentators expect this reduced rate of growth to still outpace U.S. economic growth.
- Global investors and traders will continue to show interest in benefitting from the opening up of China’s markets, leading to an increase in demand for transparent and reliable China market data.
- As things stand, we anticipate that the U.S.-China trade tussle will rumble on in 2020.
- BRI initiatives will continue and more countries, particularly in Africa and Latin America, are expected to join soon. The program remains central to China’s foreign policy and economic expansion.
- In the face of ongoing uncertainty, the U.S. dollar will remain the safe haven currency of choice.
Amidst these ongoing developments, the opportunities and risks presented by China must be carefully assessed, with robust data and leading-edge technology supported by trusted human expertise.
Refinitiv’s China market data
Given this complex backdrop and ever-changing landscape, Refinitiv remains committed to delivering robust and complete China market data to empower investors to make better decisions.
In line with this commitment, 2019 saw Refinitiv add 300,000 economic data sets to Datastream, our comprehensive financial time series database that delivers 65 years of data, along with leading-edge tools to enable an accurate interpretation of market trends, economic cycles, and the impact of macroeconomic developments.
We also launched two new apps over the course of 2019.
- Our China Price Discovery app has been specifically designed to help traders and investors by collecting real-time data and quotes on the Chinese foreign exchange and money markets, as well as to provide investors with the latest financial market news.
- Our BRI Connect app enables investors to identify and assess investment opportunities presented by the BRI initiative. The app delivers trusted business intelligence and crucial insights into global BRI investment opportunities and BRI-related organizations.