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Iran and China are working towards partnerships – would benefit by offsetting US pressures on each

A weekend report from the Wall Street Journal on mooted wide ranging partnership discussion by the two countries:

  • China would benefit from Iranian oil
  • Iran would get Chinese investment
Iran and China partnering up would deflect US pressures and influence on both.
WSJ goes on:
  • An initial draft of the Iran-China deal still requires Iranian parliamentary approval
  • under a 25-year partnership, China would import “sustainable” levels of Iranian oil, but offered no further details
Here is the link for more (may be gated).

iran china

If Australia joins the US in a new cold war against China it will “pay an unbearable price “

China’s Global Times says Australia’s economy “cannot withstand” a cold war with China

Its an opinion piece in the outspoken GT and comes in response to US Republican Senator Rick Scott urging Australia to join the US in a new “Cold War” against China.
Here is the link, there is plenty more of this sort of thing here:
  • Canberra should be mindful of avoiding inappropriate statements from its officials or politicians that may echo what Scott urged. 
  • Due to escalating tensions between the two countries on multiple fronts – such as the Hong Kong affair, a US-led inquiry into the origin of the coronavirus origins, and a travel and study warning – China-Australia relations have been rapidly sliding to near freezing point. 
  • A new Cold War may only further jeopardize the already fragile relations between the two sides.
I wouldn’t think this sort of sentiment is a positive for AUD, yeah? Here is the link to the GT article
China's Global Times says Australia's economy "cannot withstand" a cold war with China 

The PBOC is expected to cut interest rates, RRR in H2 to support the economy

What’s ahead from the People’s Bank of China, China’s Global Times with the heads up:

  • highly likely to announce interest rate cuts or reserve requirement ratio (RRR) cuts in the second half of the year
  • to help accelerate an economic recovery from the negatives induced by the COVID-19 outbreak and external uncertainties
  • cuts are most likely to be made on interest rates for the standing lending facility (SLF) and RRR
  • PBOC will use a variety of tools including reserve requirement ratio cuts, interest rate reductions and re-lending
  • the Bank wants M2 money supply and aggregate financing to grow at notably higher rates than last year
GT citing Chinese experts examining the monetary policy related information in this year’s Government Work Report.
This policy is aimed at more support for liquidity, firms and the consumer. If it lifts China’s economy it should be supportive of China and China-proxy trades.
What's ahead from the People's Bank of China, China's Global Times with the heads up: 

China press warn of the danger of Trump administration downplaying the coronavirus

China’s Global Times with the piece. GT is not the most, err, independent of media but given the Chinese experience with the dangers of COVID-19 they do have a point:

  • coronavirus continues to spread rapidly across the US
  • officials including President Donald Trump and some in the public still seek to downplay the risk of the deadly virus
  • an apparent bid to avoid disruptions to economic activities by arguing the common flu is more fatal than COVID-19
  • raises questions about whether the epidemic can be contained effectively
  • irresponsible for public health security

OECD cuts 2020 global economic forecast to 2.4% from 2.9% previously

OECD warns that the global economy may shrink in Q1 2020

This follows their November forecast here previously. Notably, they have slashed China’s growth forecast to 4.9% from 5.7% previously. Meanwhile, in the US they forecast a 1.9% growth for the year – slightly lower by 2.0% previously.

As for the euro area, OECD sees growth of 0.8% this year, down from 1.1% previously. They note that the forecasts are currently based on the coronavirus epidemic peaking this quarter and says Japan and Europe risks a recession in their downside scenario.

China trade body says some customers have stopped accepting China metal products amid coronavirus outbreak

China trade body: some customers in Russia, Turkey, Middle East and North Africa have stopped accepting deliveries of China metal products amid coronavirus outbreak

More:
  • some overseas customers, including from India, ask China metal firms to pay damages for failure to deliver products on time

Moody’s on the phase 1 US-China deal – will not resolve core differences

Moody’s downbeat not only on the trade deal …

  • says outlook for APAC corporates remains negative in 2020 amid slowing global growth and trade policy uncertainty
  • “while positive, the US-China trade agreement will not resolve core differences, dampening business sentiment globally”
  • global economic growth will remain lacklustre, with growth in the US and China decelerating to 1.7% and 5.8% respectively in 2020
  • expects major central banks, including US Fed ECB, & BOJ will maintain accommodative monetary policies

Dunno, at least until the November US election we can expect US-China differences to be swept under the carpet? Or, maybe not?

APAC is Asia-Pacific in case you are wondering.

3 big doubts on the phase 1 US-China trade deal

The Financial Times flags concerns that business have with the trade truce signed by the US and China

  • left billions of dollars of US tariffs on Chinese goods in place
  • doubts about whether the truce will stick
  • a desire for US officials to complete the work by extracting further structural concessions from Beijing
The piece does say, more positively that the risk of a new escalation in tariffs and tension in the near term – and possibly even until after the November 2020 presidential election – is lower.
  •  there is still broad concern in corporate America that the truce is fragile and limited. If the Trump administration believes that China is not living up to its commitments, it could quickly and unilaterally move to impose new tariffs on Chinese goods, leading to a new escalation.
Yep … this is not over, as we all know.
FT link, may be gated.

Singapore loosens monetary policy for first time in 3.5 years

Singapore has moved to loosen its monetary policy for the first time in three-and-a-half years to help offset slowing economic momentum due to prolonged U.S.-China trade tensions.

As a small, heavily trade-dependent economy, the country has been heavily exposed to the tariff battle between two of its largest trading partners. Exports have been falling at a double-digit pace from last year’s levels.

The Monetary Authority of Singapore, the central bank, said in its semiannual policy statement Monday that it would slightly decrease the slope of the Singapore dollar’s exchange policy band, a move to guide a weaker appreciation of the local currency.

The nation’s monetary policy is based on its exchange rate whereby the Singapore dollar is managed against a basket of currencies representing the country’s major trading partners.

With this move, Singapore follows regional peers such as Indonesia, the Philippines and India, all of which have eased monetary policy by cutting interest rates in recent months.

Singapore’s adjustment comes as trade-related industries stagnate under pressure from the U.S.-China standoff, though economists say domestically focused sectors have held up better. (more…)

China only a hair away from US in Fortune Global 500

China is now neck and neck with the U.S. in Fortune Global 500 members, reflecting a shift in economic power that lies at the heart of trade tensions between Beijing and Washington.

This year’s ranking of the world’s 500 largest businesses by year-earlier revenue includes 119 Chinese companies, up from 111 in 2018. U.S. enterprises declined to 121 from 126. Two decades ago, Chinese entries numbered in the single digits. So “though China has a stronger presence near the bottom of the roster than the top, it’s clear where the momentum is,” wrote Clifton Leaf, editor-in-chief of Fortune magazine.

Among the 39 Chinese companies in this year’s top 150, all but five are state-owned enterprises. They include banks, automakers, and such energy giants as Sinopec Group, China National Petroleum and State Grid, which have solidified their positions in the top 10.

Major Chinese major technology companies are rapidly moving up the ladder, with Alibaba Group Holding and Tencent Holdings climbing 118 and 94 rungs to No. 182 and No. 237. Hong Kong-listed Xiaomi debuted on the list at No. 468.

These patterns highlight core issues underlying the Sino-American trade war: China’s rising economic prowess, a technology race where it is rapidly catching up, and a clash of economic paradigms. (more…)