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U.S.-China political tensions may have little impact on China’s economy: investment strategist

There is a low risk that U.S.-China political tensions will derail China’s V-shaped economic recovery, as the Chinese economy is becoming more domestic consumption-driven, according to a U.S. investment expert.

“Life in China has been gradually getting back to normal since March, and July was the fifth consecutive month of a V-shaped economic recovery,” Andy Rothman, investment strategist at San Francisco-based investment firm Matthews Asia, wrote Friday in an analysis.

Noting that China’s economy is increasingly driven by domestic demand, Rothman said it is important that consumer spending has been bouncing back.

“Although consumer spending is likely to remain softer than usual until next year, on a relative basis China is likely to remain the world’s best consumer story,” he said.

The U.S. expert also highlighted that the sales recovery of autos and homes reflects that China’s middle-class and wealthy consumers “have both sufficient money and enough confidence in the future to spend it.”

Restaurant and bar sales, as well as other businesses that require customers to gather in confined spaces, however, are likely to take a long time to fully recover, Rothman said.

He noted that the political relationship between Washington and Beijing has been in “a sharp, downward spiral” for several months, and tensions are “almost certain to increase further” between now and Nov. 3, the date for U.S. presidential election.

“Although I am pessimistic about the near-term trajectory of the Washington-Beijing political relationship, I remain optimistic about China’s economic prospects,” Rothman said.

“There is a low risk that bilateral political tensions will derail the V-shaped economic recovery,” he said, noting that domestic consumption accounted for almost 60 percent of China’s GDP growth last year.
Source: Xinhua

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