Global trade is likely to improve in 2020 as US, China prepare to sign phase one deal, business leaders say
- Increasing clarity about relationship between US and China should help foster global trade this year, Li & Fung chairman says
- Trade war has led to a rewiring of global supply chains
Global trade is likely to recover somewhat this year following a tumultuous 2019, which was marked by an escalating trade war between the United States and China, according to William Fung Kwok-lun, chairman of global supply chain manager Li & Fung.
Speaking on a trade finance panel at the Asian Financial Forum on Monday, Fung said he was optimistic about this year because “we couldn’t have a more horrible year than last year” and there was increasing clarity about the relationship between the world’s two largest economies following a phase one trade deal between the countries, which is expected to be signed this week.
“In my 40-year career in global trade, I have not seen a moment in time other than when China entered the world in 1979, where there’s more disruption to the existing trade flows,” Fung said. “I would say we are in an environment of rewiring all of the supply chains.”
The US and China have been locked in a trade war for 18 months, with US President Donald Trump aggressively using tariffs to try to force Beijing to change decades of industrial and trade policies. China has responded with its own tariffs.
The uncertainty about trade policies and rising protectionism around the globe has led companies to delay investment and shift some production out of China in hopes of avoiding a tariff hit. However, optimism was growing that some of that uncertainty will be removed as China and the US prepare to sign their deal this week.
Fung said the rewiring of the global supply chain had shifted production out of China to Southeast Asia, South Asia and Africa, creating a US$1 trillion opportunity for trade finance.
