US Protectionism: Fears overblown
The US-China trade war is set to escalate. In a follow up to last month’s decision to impose tariffs on Chinese imports, this week the US administration published a detailed breakdown of some 1300 Chinese industrial, transport and medical goods that could be subject to 25% duties. Until now China has been rather measured in its response. It is unlikely to take the latest developments lying down though. China’s Commerce Ministry has already said it ‘will soon take measures of equal intensity and scale against US goods’ while urging fellow WTO members to join it ‘in firmly resisting US protectionism’.Markets and investors are justifiably nervous. In Asianomics Special Report No. 3/2018, US protectionism: Fears overblown, 5 April we do a deep dive into the issue. Our conclusion is that the US just does not carry the weight it used to in either the world economy or international trade. America’s position of dominance is being usurped by the growing economies of Asia and China. This is re-orientating global trading patterns away from the US towards Asia. The dominance of intra-regional trade and its increasingly domestic demand driven business cycles only add to the region’s resilience.
Bottom line: Today the world at large is less vulnerable to rising US protectionism and Asia is best placed to weather a global trade war.
Asianomics, founded by Dr Jim Walker in 2007 and based in Hong Kong, specialises in economic analysis research, cross-referencing their work with credit cycles, profit cycles and cash flows. Asianomics focus is on developments in the Asia-Pacific region, and they also cover developed markets like the US and Europe.
The Austrian Economics model provides a framework for the economic research. The basis of the School of Austrian Economics is that economies work more efficiently and effectively when companies and individuals are free from excessive interference by government and special interest groups. The Asianomics economic research team includes Deputy Chief Economist Sharmila Whelan who is recognised for non-consensus thinking and her depth and quality of primary research, and Chief Economist Dr. Jim Walker.
Asianomics’ subscribers have access to regular economic commentary, stand-alone Country Reports, Special Reports and Investment Strategy Reports. Dr. Jim Walker also provides weekly webcasts.
Dr. Jim Walker is regarded as one of Asia’s leading economists. Prior to setting up Asianomics, he was the Chief Economist at CLSA Asia-Pacific Markets, where he worked for more than 16 years. He has achieved numerous ‘Best Economist’ rankings in the Asiamoney, Institutional Investor and Greenwich surveys of fund managers.
Previous successful calls include:
- In 1995 Dr. Jim Walker wrote about the prospect of Asia being forced off its de facto dollar peg “within the next two-three years”. The Asian Crisis, precipitated by the Thai baht devaluation, began in July 1997.
- Forecasted the US 2007 downturn and financial sector meltdown in series of ‘Apocalypse’ reports.
- Called early the upswing in the Indian stock market in the final quarter of 2013.
Recent Recommendations:
- Overweight China - We are overweight Chinese equities with momentum improvement in the economy.
- Short Sterling, Long Renminbi - China’s currency offers good upside with a positive carry.
- Short European Financials, Long Indian Financials - This is the simplest pair trade to play superior demographics and growth in Asia relative to the region with the biggest problems.
- Long EM Asia, Short Developed countries - South and SE Asia, and direct investors from North Asia, are ‘buy and hold’ investment bets.
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