Page 15 - The South China Business Journal
P. 15
If the economic tension continues and grows, what do you think will be the most negative effect on
both countries in the long run, especially in terms of federal reserves, exchange rate, and foreign
investment policy?
M: While under ordinary circumstances it’s with Chinese exports supported by a weakened yuan
difficult to project the direction of reserves, while hurting China’s ambitions for internationalizing
exchange rates, and capital flows, it is even more the currency.
challenging to do so given today’s current environment.
One outcome that is likely if tensions continue to grow However, supply chain disruptions resulting from
is that there will be undoubtedly more volatility in escalating tensions could be significant. This would
global markets and greater uncertainty overall—which destabilize other economies in the region and depress
will be bad for business. Businesses need stability and growth more broadly. European and Latin American
predictability to thrive. economies likely would not be insulated from the
fallout. Financial markets would possibly drop and
If I had to make a prediction, I’d say it is unlikely interest rates could rise. Price inflation is one of the
that Beijing would pursue efforts towards a large one- likely outcomes of a trade war, and consumer demand
off devaluation or steady depreciation of the yuan to would suffer.
offset the cost of U.S. tariffs. Any efforts to pursue this
strategy could create negative expectations for investors This is the scenario that both sides must work to avoid
and could trigger capital outflows similar to what we at all costs. As noted previously, there will be no winner
experienced in 2015. Such a strategy would also garner if tensions escalate further.
broad opposition from other trading partners dealing
Q: Do you think this current economic tension
will increase the uncertainty of foreign
investment in China and China’s investment in
the U.S.? Do you have any suggestion for those
investors?
M: There is no question that rising MwByiutrhsoinnMeBasrsXilSliiunamgnrtmu(iiLt()Ri,n)E,GxGeuocavunetgrivnzeohrVouoic,fe2G0Pu1ra7e.nsigdSdeoonnutgtohPf UrCo.hvSi.innCcaheaaBmtuAbseiPnrCeoAsfsCCJoAomsuimarPenraacceli,fitca1lk3s
tensions may compel businesses
in both countries to re-evaluate their
investment plans. In addition to long-
standing market access issues and regulatory
challenges, growing national security concerns
are increasingly contributing to an uncertain
investment environment and economic
tensions. Both the U.S. and China benefit
greatly from inbound FDI so it’s incumbent
upon our governments to find ways for our
different systems to co-exist in a manner that
promotes predictability and equitable treatment
for businesses.
This is why I eagerly look forward to returning
to Guangdong next month and joining Guangdong
Governor Ma Xingrui in co-chairing the 2018
Guangdong-U.S. Investment Cooperation Conference
on May 17. Governor Ma understands that it’s critical
that even during this more challenging period in
U.S.-China relations, we must continue to work
together to promote mutually-beneficial commercial
both countries in the long run, especially in terms of federal reserves, exchange rate, and foreign
investment policy?
M: While under ordinary circumstances it’s with Chinese exports supported by a weakened yuan
difficult to project the direction of reserves, while hurting China’s ambitions for internationalizing
exchange rates, and capital flows, it is even more the currency.
challenging to do so given today’s current environment.
One outcome that is likely if tensions continue to grow However, supply chain disruptions resulting from
is that there will be undoubtedly more volatility in escalating tensions could be significant. This would
global markets and greater uncertainty overall—which destabilize other economies in the region and depress
will be bad for business. Businesses need stability and growth more broadly. European and Latin American
predictability to thrive. economies likely would not be insulated from the
fallout. Financial markets would possibly drop and
If I had to make a prediction, I’d say it is unlikely interest rates could rise. Price inflation is one of the
that Beijing would pursue efforts towards a large one- likely outcomes of a trade war, and consumer demand
off devaluation or steady depreciation of the yuan to would suffer.
offset the cost of U.S. tariffs. Any efforts to pursue this
strategy could create negative expectations for investors This is the scenario that both sides must work to avoid
and could trigger capital outflows similar to what we at all costs. As noted previously, there will be no winner
experienced in 2015. Such a strategy would also garner if tensions escalate further.
broad opposition from other trading partners dealing
Q: Do you think this current economic tension
will increase the uncertainty of foreign
investment in China and China’s investment in
the U.S.? Do you have any suggestion for those
investors?
M: There is no question that rising MwByiutrhsoinnMeBasrsXilSliiunamgnrtmu(iiLt()Ri,n)E,GxGeuocavunetgrivnzeohrVouoic,fe2G0Pu1ra7e.nsigdSdeoonnutgtohPf UrCo.hvSi.innCcaheaaBmtuAbseiPnrCeoAsfsCCJoAomsuimarPenraacceli,fitca1lk3s
tensions may compel businesses
in both countries to re-evaluate their
investment plans. In addition to long-
standing market access issues and regulatory
challenges, growing national security concerns
are increasingly contributing to an uncertain
investment environment and economic
tensions. Both the U.S. and China benefit
greatly from inbound FDI so it’s incumbent
upon our governments to find ways for our
different systems to co-exist in a manner that
promotes predictability and equitable treatment
for businesses.
This is why I eagerly look forward to returning
to Guangdong next month and joining Guangdong
Governor Ma Xingrui in co-chairing the 2018
Guangdong-U.S. Investment Cooperation Conference
on May 17. Governor Ma understands that it’s critical
that even during this more challenging period in
U.S.-China relations, we must continue to work
together to promote mutually-beneficial commercial
