Yen Nee Lee
Much of the global economy is still reeling from lockdown measures imposed to contain the coronavirus pandemic. Restrictions that include workplace closures and stay-at-home orders significantly cut down economic activity worldwide — dampening any prospects for growth this year.
But China, where the coronavirus first emerged, is often cited as one of the few economies that could still grow. The Chinese recovery is “going to look very impressive” with a growth of 5%-6% quarter on quarter in April-June, following a contraction in the previous three months, said Michael Spencer, Deutsche Bank’s chief economist and head of research for Asia Pacific.
“The domestic demand part of the Chinese economy has recovered well,” he told CNBC’s “Squawk Box Asia.”
senior fellow at Cato Institute
‘Tough road’ ahead for U.S. economy
That would leave the U.S. economy struggling, in spite of a surprise jump in employment gains, added Spencer.
“And to repair it, it’s just not going to happen immediately. I don’t think we will reach the level of pre-crisis GDP until ... 2022 and probably way beyond that,” he told CNBC’s “Street Signs Asia” on Monday.
“So, we’ve got a tough road to follow here,” he added.
Phase one trade deal hanging ‘by a thread’
The U.S. is scheduled to hold presidential election in November. Incumbent President Donald Trump will make China “the main part of his reelection pitch” by touting that he’ll be tougher on Beijing than his presumptive Democratic challenger, Joe Biden, added Spencer.
The two countries signed the “phase one” trade deal in January, which put a pause to their tariff war that lasted over a year. The Trump administration had aimed to start talks on the second phase of the deal before the U.S. November election.
But even the phase one deal appears to be “hanging on by a thread,” said Spencer. “The risks are that even that phase one ... gets broken or gets abandoned in the next few weeks and months.”