Wall Street’s leading authority on all things Asia, Stephen Roach, said despite its worst economic numbers in more than a quarter-century, China is in no hurry to cut a new trade deal with the United States.
Roach, a Yale University senior fellow, said Beijing’s economy isn’t as bad as the latest data suggests. Reports Monday showed the world’s second-largest economy grew at 6.2%, down from the previous quarter’s 6.4% and still more than double the United States’ 3.1% GDP last quarter, according to government data.
“I was in China last week, and the general sense was that the economy was slowing in the manufacturing sector,” Roach said Monday on CNBC’s “Trading Nation.” “The larger, more rapidly growing services sector was likely to provide a source of resilience.”
Roach, the former chairman of Morgan Stanley Asia who lived in the country from 2007 to 2012, meets regularly with Chinese government officials, business executives and academics. He said he hasn’t noticed any anxiety over the trade war instigated by U.S. President Donald Trump.
Roach said the attitude in China suggests Beijing will move slowly toward cutting a trade deal unless the tariffs fight continues to escalate. Beijing’s coping mechanisms are quite effective, Roach said.
“China has ample policy space to continue to address the downside of its current growth trajectory,” he said in a note, according to CNBC. “They’re focused on doing a lot of strategic things to their economy.”
Roach has previously spoken out against the trade war, saying Washington has been too aggressive. And with things currently at a standstill, Roach said Trump’s hard-line rhetoric has likely pushed the chances of a trade deal this year down significantly.
“I don’t think they necessarily want to wait it out, and they certainly don’t want to wage a bet on the outcome of the 2020 elections,” Roach said. “But they certainly would hope if there is a change in administration, it would be less confrontational and more committed to returning to a more of a strategic partnership.”