Beautiful Virgin Islands

Tuesday, Jun 03, 2025

Coronavirus, trade war, US-China relations dominate top 2020 economy stories

Coronavirus, trade war, US-China relations dominate top 2020 economy stories

The impact of the coronavirus on China’s economy topped the list of most read economy stories of the year, with China’s trade war with the United States also featuring on the list.
1. Coronavirus: China’s economy suffers dramatic collapse in January, February in warning to rest of world


(Finbarr Bermingham and Orange Wang – March 16, 2020)

* Combined data for January and February showed that industrial production, retail sales and asset investment all declined far more than analysts expected

* Lockdowns to control the coronavirus proved to be a constraint to economic growth, but with China now in recovery, data suggests what rest of the world could expect

The coronavirus’ impact on China’s economy was made plain in new numbers released on Monday, which showed a dramatic collapse across the board.

Amid a widespread shutdown of manufacturing operations, industrial production – a measure of manufacturing, mining and utilities activity – declined by 13.5 per cent over the first two months of the year, combined data for January and February showed.

This was the first decline on record, although ordinarily the data is released monthly. But the numbers were well below expectations of a 3.0 per cent decline.

2. China increasingly worried about ‘losing face’ as Japan bankrolls exodus of firms


(Cissy Zhou – August 5, 2020)

* Japan has offered a group of 87 companies subsidies totalling US$653 million to expand production at home and in Southeast Asia

* The coronavirus pandemic has wreaked havoc on global supply chains, and Japan is officially trying to diversify to make them more resilient

Japan’s decision to offer an initial group of 87 companies subsidies totalling US$653 million to expand production at home and in Southeast Asia has sparked debate over whether the world’s third largest economy is trying to gradually decouple from China.

The coronavirus pandemic has wreaked havoc on global supply chains, with the crisis underlining what many companies and countries have known for some time: they are too reliant on China.

China is Japan’s largest trading partner, and Japan is China’s second largest trading partner, and while not all of the enterprises involved in the initial wave have operations in China, the move by the Japanese government has sparked concerns in China.

3. Hong Kong security law: China weighs risk US will go for ‘nuclear option’ and cut Beijing from the dollar payment system


(Karen Yeung and Zhou Xin – June 1, 2020)

* Risks of US financial sanctions emerge for China after National People’s Congress approves national security law for Hong Kong

* Beijing wonders whether Washington will cut it off from US dollar payment system and hasten the demise of dollar hegemony in the process

A new and troubling question is suddenly looming for Beijing: will the Trump administration abuse the power of the US dollar to hurt China following Beijing’s plan to impose a new national security law in Hong Kong?

While the probability remains very low that China will be treated like Russia or Iran, and US President Donald Trump has not mentioned sanctions against Hong Kong or Chinese financial institutions, the risk of a financial war – including being cut off from the US dollar system – is no longer “unthinkable” for China.

If Washington were to sever China’s corporate and financial system from the US dollar payments system, which is underpinned by infrastructure such as the Swift international payments messaging system and the Clearing House Interbank Payments System (Chips), it could start a financial tsunami that would lead global finance into unchartered territory, officials and analysts said.
Read the full story here.

4. China bought more US debt in May despite talk of financial war amid rising trans-Pacific tensions


(Orange Wang – July 21, 2020)

* China added US$10.9 billion of US Treasury securities in May, the first purchase since February, although the US$1.08 trillion total is slightly down from 12 months earlier

* Tensions have been rising between Beijing and Washington over the coronavirus, Hong Kong and Xinjiang, with questions raised over China’s access to the US dollar

China modestly increased its holdings of US Treasury securities in May, the first purchase in three months, despite rising trans-Pacific tensions and growing talk of a financial war between the world’s two largest economies.

China added US$10.9 billion of US Treasury securities in May from a month earlier, after cutting its holdings in each of the previous two months, according to a report released by the US Treasury Department last week.

The modest growth comes amid increased that confrontation between Beijing and Washington over the coronavirus pandemic, the Hong Kong national security law and Xinjiang could spill over into the financial sector.
Read the full story here.

5. US semiconductor giant shuts China factory hailed as ‘a miracle’, in blow to Beijing’s chip plans


(Sidney Leng – May 20, 2020)

* US chip giant GlobalFoundries confirms it has ceased operations at its only Chinese facility, with industry experts saying the poorly-planned project was doomed to fail

* Closure deals blow to China’s plans to move up semiconductor value chain, amid increasingly hostile tech rivalry with the United States

US chip giant GlobalFoundries has halted operations at a joint venture factory in China, the company has confirmed, dealing a potential blow to China’s bid to own a bigger slice of the global semiconductor market.

The closure of the firm’s only China facility comes just three years after it announced plans to make chips in the mainland, and comes amid an escalating tech war with the United States.

The winding down, however, has little to do with the fierce superpower rivalry. It comes after two years of speculation as to what was actually happening at the US$100 million facility, which was hailed as “a miracle” by local media when announced to fanfare in 2017, but which never got off the ground.
Read the full story here.

6. Is China rich or poor? Nation’s wealth debate muddied by conflicting government data


(Zhou Xin – May 29, 2020)

* Premier Li Keqiang said this week that China has 600 million people with a monthly income of 1,000 yuan (US$140), stoking ongoing debate about China’s wealth

* Alternative government data sets have painted a different picture, with one saying urban households have on average on 3.2 million yuan in assets

A long-standing debate over whether China is a rich or poor nation has been reignited in recent weeks after the government released a series of diverging data sets on wealth in the world’s second biggest economy.

Premier Li Keqiang added fuel to the discussion on Thursday, saying that China has 600 million people living on a monthly income of 1,000 yuan (US$140).

“It’s barely enough to cover monthly rent in a mid-sized Chinese city,” Li told a press conference in Beijing.
Read the full story here.

7. Trade war: China to make huge purchases of US goods as details of phase one deal revealed


(Finbarr Bermingham, Ben White and Doug Palmer – January 14, 2020)

* Sources confirm that China has committed to making large scale purchases of US$200 billion of American goods as part of the phase one trade deal

* Purchase target for manufactured goods of around US$75 billion, with China also committing to buy huge amounts of energy, agriculture and services

The trade deal to be signed this week will include pledges by China to buy US$200 billion of US goods over two years in four industries, a Trump administration official and two other sources briefed on the matter said.

The target for manufactured goods purchases will be the largest, worth around US$75 billion. China will also promise to buy US$50 billion worth of energy, US$40 billion in agriculture and US$35 billion to US$40 billion in services, the three people said.

On Monday night, meanwhile, the United States removed China from a list of currency manipulators, a sign that the relationship between the world’s two largest economies was thawing slightly in the lead up to the signing of the phase one deal.

8. China debt: how big is it and who owns it?


(Amanda Lee – May 19, 2020)

* The Institute of International Finance (IIF) estimated that China’s total domestic debt rose to 335 per cent of gross domestic product (GDP) in the third quarter of 2020

* This follows an estimate of 335 per cent in the second quarter of 2020

What is the nature of China’s debt?


Broadly speaking, China’s debt can be divided into domestic debt and foreign debt.

China’s domestic debt, denominated in yuan, consists of three components: corporate, household and government debt. Corporate debt includes borrowings by private sector and state-owned companies, while China’s public debt is a combination of national and local government debt. Household debt, meanwhile, is the combined debt of all people in a household, including consumer debt and mortgage loans.

China’s foreign debt in currencies other than the yuan includes private sector firms’ borrowing from foreign banks, trade-related credit to Chinese firms from foreign trading partners and debt securities issued by Chinese state-owned and private sector firms to foreign investors.

9. Trade war: China to travel to US on January 13 to sign phase one deal


(Zhou Xin – January 5, 2020)

* China delegation reschedules US trip after US President Donald Trump unilaterally announced January 15 date for ‘high representatives’ from Beijing to sign deal

* The eagerness from the US president to claim a big ‘win’ from the phase one deal contrasts with Beijing’s more measured approach

China’s trade delegation tentatively plans to travel to Washington for four days from January 13 for the signing of the phase one deal that would herald a truce in the costly trade war between the world’s two largest economies, a source briefed on the matter has told the South China Morning Post.

Led by Vice-Premier Liu He, the delegation had originally planned to set off earlier in the month but had to change their travel schedule after US President Donald Trump sent a tweet on New Year’s Eve claiming that he would sign the deal with “high representatives” from Beijing on January 15 in the White House.

While the two sides had been expected to wrap up their phase one negotiations by January, the Chinese side had not expected Trump to make a unilateral announcement about the date, or to say that he would be willing to sign the deal – even if President Xi Jinping was not available.

10. Coronavirus: China could cut US debt holdings in response to White House Covid-19 compensation threats, analysts say


(Karen Yeung – May 6, 2020)

* US news reports suggest White House officials have already considered the idea of cancelling all or part of the US$1.1 trillion debt owed to China

* In response to the debate over the highly unlikely ‘nuclear option’, China could cut its holdings as the US ramps up borrowing to pay coronavirus-related costs

China may move to reduce its vast holdings of US Treasury securities in the coming months in response to a resurgence in trade tensions and a war of words between the world’s two largest economies over the origins and handling of the coronavirus outbreak, analysts said.

US news reports indicated that White House officials have debated several measures to offset the cost of the coronavirus outbreak, including cancelling some or all of the nearly US$1.1 trillion debt that the United States government owes China.

While analysts added that the US was highly unlikely to take the “nuclear option”, the mere fact that the idea has been discussed could well prompt Beijing to seek to insulate itself from the risk by reducing its US government debt holdings.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
China Accuses US of Violating Trade Truce
Panama Port Owner Balances US-China Pressures
France Implements Nationwide Outdoor Smoking Ban to Protect Children
German Chancellor Merz Keeps Putin Guessing on Missile Strategy
Mandelson Criticizes UK's 'Fetish' for Abandoning EU Regulations
British Fishing Boat Owner Fined €30,000 by French Authorities
Dutch government falls as far-right leader Wilders quits coalition
Harvard Urges US to Unfreeze Funds for Public Health Research
Businessman Mauled by Lion at Luxury Namibian Lodge
Researchers Consider New Destinations Beyond the U.S.
53-Year-Old Doctor Claims Biological Age of 23
Trump Struggles to Secure Trade Deals With China and Europe
Russia to Return 6,000 Corpses Under Ukraine Prisoner Swap Deal
Microsoft Lays Off Hundreds More Amid Restructuring
Harvey Weinstein’s Publicist Embraces Notoriety
Macron and Meloni Seek Unity Despite Tensions
Trump Administration Accused of Obstructing Deportation Cases
Newark Mayor Sues Over Arrest at Immigration Facility
Center-Left Candidate Projected to Win South Korean Presidency
Trump’s Tariffs Predicted to Stall Global Economic Growth
South Korea’s President-Elect Expected to Take Softer Line on Trump and North Korea
Trump’s China Strategy Remains a Geopolitical Puzzle
Ukraine Executes Long-Range Drone Strikes on Russian Airbases
Conservative Karol Nawrocki wins Poland’s presidential election
Study Identifies Potential Radicalization Risk Among Over One Million Muslims in Germany
Good news: Annalena Baerbock Elected President of the UN General Assembly
Apple Appeals EU Law Over User Data Sharing Requirements
South Africa: "First Black Bank" Collapses after Being Looted by Owners
Poland will now withdraw from the EU migration pact after pro-Trump nationalist wins Election
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Trump Cancels NASA Nominee Over Democratic Donations
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Mayor’s Security Officer Implicated | Shocking New Details Emerge in NYC Kidnapping Case
Hegseth Warns of Potential Chinese Military Action Against Taiwan
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Jamie Dimon Warns U.S. Bond Market Faces Pressure from Rising Debt
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Taylor Swift Gains Ownership of Her First Six Albums
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
×