Fri, Jun 21, 2019 - Page 12 News List

UBS gives US-China deal a 15% chance at G20

By Kao Shih-ching  /  Staff reporter

The chance that the US and China will reach an agreement at the G20 summit in Japan next week is slim, as it would be difficult for them to solve core issues in the short term, UBS Group AG said on Monday.

While US President Donald Trump and Chinese President Xi Jinping (習近平) plan to meet on the sidelines of the summit, UBS said that there is only a 15 percent chance that the world’s two largest economies would come to an agreement, chief China strategist Thomas Deng (鄧體順) told a news conference in Taipei.

Neither side is experiencing enough pain for a deal to be imminent, Deng said, adding that China’s economy saw stable growth in the first quarter, while the US’ annual GDP growth over the same period was 3.1 percent, partially due to revenue from tariffs.

However, there are still incentives for the two countries to make a deal, as Trump faces re-election next year and both leaders want to reduce the uncertainty surrounding the trade tensions, Deng said.

UBS forecast that there would be a 50 percent chance that the US and China would call a truce in the second half of this year, and a 35 percent chance that their talks would break down.

China’s annual economic growth would drop from 6 percent to 5 percent if the talks break down, as the US would impose tariffs on another US$300 billion of Chinese goods, he said.

The yuan is expected to weaken to 7 to the US dollar if there is a breakdown in talks, while the currency could stay at 6.7 to 6.8 against the greenback if the two countries reach a deal, he said.

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