CGTN Europe discussed this with Zhang Zhiwei, President & Chief Economist at Pinpoint Asset Management
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00:00Now Zhang Juewei is president and chief economist at Pinpoint Asset Management.
00:05He says investors appear to be quite relieved at Beijing's measured response to the US tariffs.
00:11The headline looks pretty scary, but when we look into the details, you know, these measures look really minimal.
00:18For instance, the products that China imposed tariff on, the US exports to China,
00:26that only account for something like 8-9% of US total exports to China.
00:32You know, this is in the context of US imposing tariff on pretty much everything that China exports to the US.
00:40So in that sense, the response is very muted.
00:43So I think investors look at the details and actually got, you know, quite relieved.
00:49If you look at the price action in the stock market, it's actually telling you the message that it dropped very briefly and then rebounded.
00:57So people, I don't think this is a really very, very aggressive retaliation at all.
01:03We know that Donald Trump is concerned about the trade deficit, but also the opioid fentanyl coming into the USA from China.
01:11Do you believe that a compromise can be reached on these issues before China's tariffs kick in next Monday?
01:19For the market, for investors to wait in the next few days, I think there will probably be a call between the two leaders in the coming days.
01:28I think that's really the focus among all the investors looking at China.
01:32Hopefully, something can be worked out.
01:36So, you know, it looks pretty scary, but I don't think in real term, I mean, they really matter that much.
01:42Of course, the United States and China are the world's two biggest economies.
01:47Both are very, very strong economically.
01:50If they start a trade war, if they start fighting, the rest of the world surely is going to suffer.
01:56Bearing in mind China's muted response so far, how real is the possibility of a big trade war?
02:04Yeah, I think some conflict in trade is certainly one scenario that investors have to work with.
02:13I'm not sure that's a baseline scenario.
02:15I think a lot of investors that I talk to consider something of, you know, 10, 20 percent of tariff,
02:22that kind of intensity that people do expect to happen sometime down the road.
02:30But that's not the end of the world.
02:32I think 10, 20 percent of tariff is painful, but it's manageable, I would say, from a global economy perspective.
02:40The key issue is to stop it from escalation.
02:44Not the, you know, if one side raised tariff and spill over to, you know, other products,
02:51and also beyond the trade, I think that would become a bigger issue.
02:55That's what investors worry about.