China retaliates as Trump tariffs kick-in

CGTN Europe discussed this with Zhang Zhiwei, President & Chief Economist at Pinpoint Asset Management

Transcript

00:00Now Zhang Juewei is president and chief economist at Pinpoint Asset Management.

00:05He says investors appear to be quite relieved at Beijing's measured response to the US tariffs.

00:11The headline looks pretty scary, but when we look into the details, you know, these measures look really minimal.

00:18For instance, the products that China imposed tariff on, the US exports to China,

00:26that only account for something like 8-9% of US total exports to China.

00:32You know, this is in the context of US imposing tariff on pretty much everything that China exports to the US.

00:40So in that sense, the response is very muted.

00:43So I think investors look at the details and actually got, you know, quite relieved.

00:49If you look at the price action in the stock market, it's actually telling you the message that it dropped very briefly and then rebounded.

00:57So people, I don't think this is a really very, very aggressive retaliation at all.

01:03We know that Donald Trump is concerned about the trade deficit, but also the opioid fentanyl coming into the USA from China.

01:11Do you believe that a compromise can be reached on these issues before China's tariffs kick in next Monday?

01:19For the market, for investors to wait in the next few days, I think there will probably be a call between the two leaders in the coming days.

01:28I think that's really the focus among all the investors looking at China.

01:32Hopefully, something can be worked out.

01:36So, you know, it looks pretty scary, but I don't think in real term, I mean, they really matter that much.

01:42Of course, the United States and China are the world's two biggest economies.

01:47Both are very, very strong economically.

01:50If they start a trade war, if they start fighting, the rest of the world surely is going to suffer.

01:56Bearing in mind China's muted response so far, how real is the possibility of a big trade war?

02:04Yeah, I think some conflict in trade is certainly one scenario that investors have to work with.

02:13I'm not sure that's a baseline scenario.

02:15I think a lot of investors that I talk to consider something of, you know, 10, 20 percent of tariff,

02:22that kind of intensity that people do expect to happen sometime down the road.

02:30But that's not the end of the world.

02:32I think 10, 20 percent of tariff is painful, but it's manageable, I would say, from a global economy perspective.

02:40The key issue is to stop it from escalation.

02:44Not the, you know, if one side raised tariff and spill over to, you know, other products,

02:51and also beyond the trade, I think that would become a bigger issue.

02:55That's what investors worry about.