Trump’s victory brings uncertainty to economic policy and Sino-US relations

By Hu Weijia Source:Global Times Published: 2016/11/10 0:33:39

The biggest risk for China in the wake of Donald Trump's presidential victory will be the rise of policy uncertainty in the US.

The Chinese mainland stock markets fell Wednesday as Trump overtook Hillary Clinton in the polls as the election results came in, reflecting Chinese investors' concerns of Trump taking the helm of the world's largest economy. Risk aversion dominated Chinese markets, while gold shares showed a good performance.

What a Trump victory will mean for Sino-US relations is far from clear. China is more familiar with Clinton, a former secretary of state and former first lady, but Beijing has no experience with Trump. Throughout his campaign, Trump regularly railed against China and displayed his intent to drastically adjust US foreign trade policy, both of which increase the uncertainty in Sino-US relations.

The US is expected to stop extending its tentacles across Asia and focus on shoring up its sluggish domestic economy after Trump assumes office. China will keep a close watch on the matter as the US still has an unshakable influence on the global economy. Global financial markets reacted sharply on Wednesday when it was announced that Trump - who has suggested he would squeeze trade partners to achieve American interests - would be the next president. How much markets will be impacted as the transition unfolds is uncertain, but China can only hope its markets will be less effected.

The US billionaire is optimistically expected to become more rational when he assumes the office of the US president. Trump said Wednesday in his victory speech that the US "will seek common ground, not hostility. Partnership, not conflict." We believe the president-elect will strike a balance on the international stage to maximize the US' interest.

China and the US are economically interdependent, so economic and political tensions can be a double-edged sword. If Trump follows his campaign stance and imposes pressure on China over a host of economic issues, US firms doing business in China may get caught in the fallout.

However, Trump's victory is not the worst result for China because Clinton's strategy toward China was seen as tougher than Trump's despite his unpredictability. As global stock markets fall sharply, Chinese shares remain relatively moderate. Beijing will perhaps feel more pressure from Washington on economic issues, such as trade deficits and the exchange rate of the yuan, after Trump assumes office, but it is relatively easy to solve those problems.

The author is a reporter with the Global Times.


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