The U.S.-China trade friction is in full swing, bringing uncertainty to both the Chinese and global economies. The U.S. government has just recently banned American corporations from doing business with Huawei. This is clearly an act of “encirclement and suppression" by the United States on a Chinese technology company. The United States may make a move on China in trade matters, 5G and financial sectors, intensifying the risks of China's economy in the coming year. What will happen next? Anbound researchers made their assessments. Read more. >>
In a nutshell, the biggest challenge China would face under the external pressure from the United States is the issue of the RMB exchange rate. As such, it is necessary to be prepared in keeping RMB stable in the future. If RMB remains in a downtrend, it will trigger a series of chain reactions: exchange rate depreciation, asset price decline, intensification of capital flight is intensified, the continuous weakening of RMB, which would eventually lead to the weakening foreign exchange reserves. Thus, in the medium and long term, the Chinese authorities should be alert to the RMB continuous dropping as well as the knock-on effect caused by the sharp depreciation. >>
China’s economy downward, coupled with the possible deterioration of China-U.S. trade frictions, will pose even greater challenges to China's economic policies. The macroeconomic data released in April came in below expectations, which is in contrast to the data "higher than expected" in the first quarter. Anbound researchers explained that in the current situation, there are still internal and external pressures hefty to the Chinese economy. Domestically, the transformation and upgrading of the industry running slow and there is also the lingering problem of overcapacity. Externally, the sudden changes during the U.S.-China trade talks have brought new uncertainties to the economy. If China does its best to stimulate its economy in response to the downward pressure, it will have no matter to reach its growth target of 6-6.5% in 2019. While 2020 and 2021 come around, the economy may see another decline. Therefore, to stabilize market confidence in the short term, China's macro policies need to maintain their focus and targets. In the medium and long term, it is necessary to press ahead with reform and opening-up, as well as solve the structural problems in the Chinese economy. >>
The three main types of Taiwan-funded enterprises investing in the Mainland included hand tool, electronic technology, and textile industries. The hand tool industry has an average profit margin of 10%, the 25% tariff makes doing business unbearable. The electronics industry has the highest dependence on exports to the United States, reaching levels of up to 9.77%. Compared with the previous two industries, the textile industry has a pretty scattered production base. Hence, the impact of the U.S.-China trade war will be in a form that is different from what the other two industries are experiencing. From the case analysis of Taiwan-funded enterprises, there are three types of coping strategies adopted by foreign-funded enterprises in dealing with the impact of trade conflicts: remaining in their original position, accelerating the transfer process and transferring exports to products in the domestic market. These three ways have different effects on the Chinese industrial chain. If the target market of foreign capital turns to Mainland China, Chinese enterprises must strengthen the competitiveness of their products in order to cope with a series of aftershocks caused by the increase of U.S. tariffs. >>
ANBOUND partner, ESI ThoughtLab, on behalf of EY, conducted a comprehensive global survey of 2,000 clients in 26 countries. To help wealth managers navigate the changes in the marketplace and to deliver enhanced value, ESI ThoughtLab profiled clients not just by traditional segments, such as age, gender, wealth, and location, but also by level of education, profession, investment knowledge, risk appetite, and psychographic profile. The goal was to understand their changing needs, behaviors, and value perceptions, and to provide actionable insights to service providers. To learn more about the 2019 Global Wealth Management Research Report, click here .