Whoever wins, trade protectionism may gain momentum under new administration
On Sunday, just days ahead of the U.S. presidential election, Chinese experts warned there will be some negative impacts from the election on global trade, financial markets and the Chinese economy in the near future.
The messy election is likely to exacerbate the trend of populism within the U.S. that will continue through the next presidency, five experts at the Beijing-based Pangoal Research Institute of Macro-Economics (PRIME) wrote in a report released on Sunday.
The report also said the election has revealed a worsening income gap divide, more challenges for the middle class and a growing trend of populism in the country.
Given such factors, the next administration will likely need to focus more on domestic interests, rather than global concerns, the report noted.
"Though we think there is a higher possibility that [Clinton] will win, competing with Trump might have significant impact on the ruling style of a [Clinton] administration," the report read, noting the U.S. government might head further toward trade protectionism and be increasingly unwilling to offer global public goods.
"That's not good news for the global trade and financial markets," Zhang Ming, a senior research fellow at PRIME and chief author of the report, told a press briefing in Beijing.
Indirect impacts
The election, along with a highly likely U.S. interest rates hike, a strengthening U.S. dollar, a hard Brexit and other global events, would indirectly pose some challenges for the Chinese economy, according to the report.
Such events put more pressure on further depreciation of the yuan against the U.S. dollar and short-term capital outflow from the world's second-largest economy, the report said. Zhang predicted that the yuan might fall below the 7 yuan per dollar mark next year.
Meanwhile, the recent rebound in China's factory activities, which was supported by the recovery in global commodity prices, has no basis for being sustained if the trend does not continue, the report said.
U.S.-China trade
However, the overall relationship between China and the U.S. won't be largely affected, despite the fact that both candidates have expressed skepticism and concerns about U.S.-China trade, U.S. experts said on Saturday.
What the candidates say and what the president can and will do are very often unrelated, Perry Wong, managing director of research at the Milken Institute, told the Global Times.
"I think, to some extent, the two candidates are selling themselves as the problem-solver," he said, noting that the presidency, whether Trump or Clinton, would not change that much in terms of bilateral trade.
As trade developments have not been too healthy, not just in the Asia Pacific region, but also worldwide, so politicians may get some feedbacks from their supporters.
"I don't see a big disruption in trade between the U.S. and China," Wong said. He noted that multiple countries are now closely linked in trading activities, for example in electronic product manufacturing, the supply chain is based in China while the design chain is in Silicon Valley, but the production process may involve more than five countries before the gadget lands in China, so it will not be easy to change the current trade patterns.
Trade is a significant issue during the presidential campaign, and "both candidates have expressed skepticism and concern in respect to the current trade policies of the U.S. in general, and they've also expressed some specific concerns with respect to China," Wendy Cutler, vice president of the Asia Society Policy Institute, told the Global Times on Saturday.
Republican candidate Donald Trump has repeatedly said he would renegotiate NAFTA and impose a 35 percent tariff on imports from Mexico and a 45 percent of tariff on China. Meanwhile, Democratic candidate Hillary Clinton said in her DNC speech that "if you believe that we should say no to unfair trade deals, that we would stand up to China… then join us."
Though confrontational rhetoric about China might pose difficulties for bilateral ties, it is unclear if the candidates would follow through on what they have said on the campaign trail, Charles Morrison, president of East-West Center told the Global Times on Saturday in Shenzhen, South China's Guangdong Province.
Even if they were to follow through, their ability to actually do so is limited because the American system of government involves multiple sectors of power, including Congress, which balances the potential of the president.
