How might a Trump administration affect China?
Special points to highlight in this issue:
• The ouster of Lou Jiwei nearly two weeks ago as Minister of Finance was a surprise, but probably will not result in a less urgent policy towards debt management.
• There is no reason to be impressed with aggressive debt-reduction plans, however. As long as China maintains its growth target, the amount by which credit has to grow is more or less fixed in advance. Any credit deceleration in one sector of the economy must necessarily be matched by an acceleration elsewhere.
• Donald Trump’s victory in last week’s election surprised Beijing – and a Chinese population that followed the election as closely as anyone else in the world – as much as it surprised nearly everyone else. There is a nearly audible scrambling among policy advisors to work out the implications for China and especially for the economy and the implications for China’s difficult adjustment.
• There are several potential Trump policies that will matter significantly to China, including actions on the trade front, infrastructure investment, and policies that affect income inequality.
Now read on...
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