ING: “When investing in Chinese equities, focus on confidence indicators over growth rate”

China’s economic outlook remains tense. Former President Donald Trump, the Republican candidate in the upcoming U.S. presidential election, is increasingly likely to win. A Trump victory could reignite the trade war between the United States and China. 

The worst-case scenario for China would be a Trump presidency combined with the Republican Party losing control of both the House and Senate. In such a case, the president would face constraints on fiscal spending due to lack of congressional approval, making it more likely he would resort to tariffs and immigration policies, which do not require congressional consent. Conversely, if Trump regains power and secures control of Congress, the “high tariff card” may be deprioritised in favour of corporate tax cuts and increased border security spending. 

Robert Carnell, head of ING’s Asia-Pacific Research Centre and an expert on the Chinese economy, told Money Lab on the 28th, “The biggest variable in China’s economy right now is the outcome of the U.S. election,” adding, “China’s economy will depend on how the global trade environment shifts post-election, the strength of domestic demand, and the effectiveness of its stimulus measures.” 

Currently, it is difficult to make firm predictions due to uncertainty around U.S. policy and China’s potential response. “Trump says he’ll impose a 60 percent tariff on China, but that may simply be a negotiating tactic,” Carnell noted. 

He dismissed China’s “5% growth target” as largely irrelevant, stating, “There’s no need to fixate on figures that most people don’t even believe, given concerns over the transparency of Chinese government statistics.” 

Carnell emphasised that investors should focus on confidence indicators—such as the consumer sentiment index—when assessing Chinese equities. “The main reason China’s stock market hasn’t rallied is a lack of confidence among companies, consumers, and investors both domestically and abroad,” he said. 

Originally published in JoongAng Ilbo: Opens in a new tabhttps://www.joongang.co.kr/article/25288280