The news flow around China over the last 24 hours hasn’t been particularly bullish for asset prices.
S&P Global warned that China’s credit rating could be cut if its economic recovery remains weak or is driven largely by extensive stimulus. S&P last downgraded China in 2017 but rival agency Moody’s put Beijing on a downgrade warning in December.
Beijing is fighting deflation, a property sector crash and slowing growth. The sums needed to turn all that around, as well as bail out indebted local governments, are extremely high.
On the trade front, three U.S. Senate Democrats from auto manufacturing states on Thursday urged the Biden administration to hike import tariffs on Chinese electric vehicles, the latest push by lawmakers to protect the U.S. auto sector.
With pressure growing on the White House to take further steps to prevent Chinese vehicle imports, the U.S. House Energy and Commerce committee approved legislation to vote on legislation giving China’s ByteDance six months to divest from short video app TikTok or face a U.S. ban.
This is the backdrop to IMF Managing Director Kristalina Georgieva and First Deputy Managing Director Gita Gopinath’s planned visit to Beijing later this month to meet with Chinese authorities and attend economic conferences.
