The China-US trade war took a massive toll on the global economy this year. As we bid farewell to 2019, many have one question in mind: what will happen in 2020?
Will the trade war's drag on the global economy gradually fade in 2020? Yes ... probably. Close interaction between China and the US is shoring up market confidence in the phase one trade deal. Chinese Ambassador to the US Cui Tiankai said last week there is no problem with Beijing meeting its phase one commitments, after US President Donald Trump suggested the US and China would hold a formal signing ceremony for the trade deal. Positive signals showed things are going well right now.
The US side has often sent mixed messages on the trade war. There is no need to read too much into criticism of the phase one trade deal coming from Trump's political opponents in the US Congress. The market should have confidence in the trade deal.
If Washington alleviates trade tensions with Beijing, will the US economy continue to expand for a 12th consecutive year in 2020? Again, yes ... we believe so. However, the US stock market looks to have entered a bubble. Although we are in just the early stages of that bubble, if people do nothing to stop risks from gradually accumulating, there will probably be a stock market crash in the US, or at least, the bull market will have less room to run.
As for 2020, will the US and China diverge in terms of their stock market performances? The answer is once again, yes ... hopefully. 2020 will be a very important year for China's securities markets and financial sector to open wider to the outside world. Many foreign securities companies have begun to seek opportunities in the world's second-largest economy. The stock market forecast looks bright in China for 2020.
Will economic performances affect the direction of China-US relations and the trade war? Again, yes. US relations with China are likely to become more complex and uneven. There are challenges ahead, but the two countries have no choice but to move forward to resolve their differences and misunderstandings.