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.
Head of Research, China
China’s new three-child policy highlights risks of aging across emerging Asia
Thailand’s (Baa1 stable) total dependency ratio is set to jump nine percentage points to 51% by 2030 – a faster increase than China’s – which will pressure public and private savings through higher taxes and social spending, reducing innovation and productivity gains.
Population aging in China (A1 stable) and other emerging markets in Asia will hurt economic growth, competitiveness and fiscal revenue, unless productivity gains accelerate, according to a new report by Moody’s Investors Service.(more…)
Clear skies over Asia’s new foreign investment landscape?
Compounding the fallout of the US–China trade war, the global pandemic and recession have caused considerable speculation on the future of foreign investment and global value chains (GVCs). But though there is likely to be some permanent change, it will probably not be as great as politicians expect.(more…)
Subscribe via Email
Thai baht becoming the region’s worst-hit currency in COVID pandemic
According to data from its tourism ministry as well as the World Bank, Thailand had only a little over 34,000...
Asia’s slow rate of vaccination is a thorn in the region’s economic recovery
Southeast Asia has been hit badly. Daily infections for Indonesia, Thailand, Vietnam are at their worst, on a seven-day moving...
TAT expects 850 billion baht ($25.7 bln) in tourism revenue after successful reopening
The Tourism Authority of Thailand (TAT) has set this year’s revenue target at 850 billion baht, 300 billion of which...
Download 1xBet mobile and play all over the world
Placing profitable bets or playing in a casino is now possible comfortably even without being tied to a computer. It...
3 ways Asia can recover from the COVID-19 pandemic faster
Countries in the East Asia and Pacific region will benefit from cooperation in three major areas: vaccine deployment, reviving sectors...