China-U.S. phase-one trade deal brightens prospect of world economy

2019-12-25 16:30:32Xinhua Editor : Cheng Zizhuo ECNS App Download

The China-U.S. phase-one economic and trade deal is beneficial to the world economy, an expert with Standard Chartered said.

"With the phase-one deal reducing the tail risk facing the global economy, we think 2020 will be a year of soft but stabilising growth for the global economy," said Ding Shuang, chief economist of Greater China and North Asia with the bank, in a recent interview with Xinhua.

He added that the global growth forecast next year is at 3.3 percent, slightly higher than the bank's 3.1 percent estimate.

China and the United States agreed on the text of the phase-one economic and trade agreement based on the principle of equality and mutual respect earlier this month, which was the latest progress for the two sides to settle their two-year-long trade dispute.

Pointing out three long-term structural drags for the global economy, namely debt, demographics, and deglobalization, Ding said the phase-one economic and trade deal will lift investors' sentiment in the global financial markets.

Oil prices hit a three-month high last week, buoyed partly by better prospects for a trade truce between the United States and China.

The U.S. equities posted solid gains last week amid positive sentiment, with the Dow adding 1.13 percent, the S&P 500 gaining 1.65 percent, and the Nasdaq rising 2.18 percent.

"The positive market reaction suggests it (the deal) is helpful in shoring up business confidence," said Ding.

The deal is also beneficial to both the United States and China, the expert said.

For the United States, the deal is "essential for President Donald Trump's re-election as it reduces the chance of a recession and boosts the stock market," while for China, it improves China's trade outlook, and reduces the need to implement large-scale stimulus to boost its economy, said Ding.

He added that the deal is also generally in line with the main direction of China's deepening reform and opening up, as well as internal needs for advancing higher quality economic development.

"Based on what has become public information, China has committed to better protect the IPR (intellectual property rights), which is essential for China to encourage investment in R&D (research and development) and foster innovation," Ding said.

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