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China

US China trade war : What does it mean for real estate?

CBRE Research expects to see Beijing hedge risk by accelerating the Belt & Road initiative to enhance trade partnerships and geopolitical ties with emerging economies

Boris Sullivan

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On March 22, U.S. President Donald Trump signed an executive memorandum imposing tariffs as high as 25% on US$60 billion-worth of Chinese exports to the U.S.

In response, on April 2, China announced retaliatory tariffs worth around US$3 billion on a range of U.S. products.

While the move has sparked concerns of a trade war between the world’s two largest economies, its actual impact on the Chinese economy is likely to be minimal, given the small size of the tariffs – and the goods they pertain to – compared to China’s overall economy.

What does it mean for real estate?

U.S. and Chinese officials are now reported to be engaged in closed-door talks aimed at preventing a trade war. Any agreement is likely to accelerate the opening up of the Chinese economy in areas including financial services, electric vehicles, healthcare and elderly care, while providing incentives for foreign businesses investing in China.

CBRE Research believes that the successful conclusion of a trade deal will drive new demand for a wide range of property types including offices, business parks and senior housing.

In the meantime, however, robust domestic demand will continue to underpin solid leasing and capital market activity.

A worse-case, and highly unlikely, scenario would involve the dispute remaining unsolved or escalating into an all-out trade war, which would negatively impact Chinese exports and create volatility in the foreign exchange market.

This would result in weaker property leasing demand, particularly in the office and industrial sectors, while prompting many foreign investors to review their China strategy. In these circumstances, the central government would be forced to finetune its fiscal and monetary policy to guard against the risk of a hard landing. This would support domestic consumption in the short-term and boost investment in infrastructure and real estate.

While trade tensions are ongoing, CBRE Research expects to see Beijing hedge risk by accelerating the Belt & Road initiative to enhance trade partnerships and geopolitical ties with emerging economies, particularly those in the Association of Southeast Asian Nations (ASEAN).

While there is no sign that the Chinese government is discouraging investment in any particular market, CBRE Research’s recent Asian Outbound Investment report found that Chinese investors are turning more active in Europe and Asia Pacific, perhaps indicating a shift away from the U.S. Nevertheless, CBRE Research believes that the U.S. will remain one of the top destinations for Chinese capital, given the uncertainty around many Belt & Road projects and the fact that Chinese investment in the U.S. is a key component of ongoing trade negotiation.

Sam Xie
Senior Director
Head of Research, China

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Business

Sony to shift smartphone plant to Thailand

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Sony’s share of the smartphone market has fallen sharply in recent years

BEIJING/TOKYO, March 28 (Reuters) – Sony Corp will close its smartphone plant in Beijing in the next few days, a company spokesman said, as the Japanese electronics giant aims to cut costs in the loss-making business.

Sony will shift production to its plant in Thailand in a bid to halve costs and turn the smartphone business profitable in the year from April 2020, the spokesman said on Thursday.

The decision to scale back its smartphone workforce, which could see up to 2,000 of the total 4,000 jobs cut by March 2020, is part of a move to reduce fixed costs in the business, and also includes procurement reform.

Sony’s share of the smartphone market has fallen sharply in recent years — from more than 3% in 2010, according to the research portal Statistica — to less than 1% currently.

It has struggled to compete against leaders Apple, Samsung Electronics and Huawei Technologies, all of which are racing to develop new 5G devices.

Sony’s smartphone business was one of the few weak spots in its otherwise robust earnings, bracing for a loss of 95 billion yen ($863 million) for this financial year. ($1 = 110.1200 yen).

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China

How will Thailand’s election affect China?

China’s investment in Thailand will not be affected much by the result of the general election.

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According to Chang Xiang a researcher at the Thai-Chinese Strategic Research Center at the National Research Council of Thailand, China’s investment in Thailand will not be affected much by the result of the general election.

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China

Will Asian economies dominate the world in 2050?

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Out of the 10 largest world economies of the world, four will be from Asia with China and India leading the world by 2050, according to the PwC report.

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