China’s annual Economic Work Conference is likely to convene within the next two weeks, meaning a trade deal with the U.S. is “imminent,” according to ICBC Standard Bank Chief China Economist Jinny Yan.
The world’s two largest economies are working toward a “phase one” trade deal, with U.S. President Donald Trump saying Tuesday that negotiators were in the “final throes” of talks.
The next tariff deadline falls on December 15, after which point additional U.S. levies on Chinese exports will go into effect. This would apply a 15% rate to a further $160 billion worth of Chinese goods, and the U.S. has indicated that without a deal before the deadline, the tariffs will go ahead.
“The key priority for (Chinese President) Xi Jinping and policymakers across China is stability, so anything that overthrows stability is going to be essentially a concern,” Yan told CNBC’s “Squawk Box Europe” Wednesday.
“That includes Hong Kong, the U.S.-China situation, and that is why a phase one deal is absolutely crucial.”
The Economic Work Conference is a closed meeting of policymakers typically held over two or three days in the second or third week of December, and sets the national agenda for China’s economy and its finance and banking sectors for the following year.
Yan suggested that owing to this coinciding with the key tariff deadline, she believes “the trade deal is imminent.”
China’s industrial profits fell 9.9% in October year-on-year, according to data released by the National Bureau of Statistics on Wednesday, adding to a slew of gloomy economic data.
However, Yan suggested that the slowdown in China is driven primarily by a slump in domestic consumption, rather than the trade war.
“That has been seen in the previous year or two because we are seeing disposable income growth slower than actual GDP growth, so whilst most people are worried about GDP growth, what we should really be worrying about is actual income growth in China,” she added.