China trade data worsens: does it need a deal?
Chinese trade data for September look pretty ugly. Exports are down 3.2% YoY and imports are down a heavy 8.5% YoY. While the former is obviously related to the US-China trade conflict, the latter implies domestic demand is decelerating. For some investors, these numbers are a clear indication that China is willing to come to an agreement with the US on trade. On the other hand, China may use the trade war to account for lower GDP growth, which was unavoidable in any case. From this angle, China may be far less willing to reach a substantial deal on trade. So, while last week’s ‘phase one’ deal between the two countries is definitely encouraging, uncertainties around the scale and meaningfulness of any deal remain significant.
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