20170117-招商证券_香港_-Trump_s_short_term_agenda__domestic_and_China_impact_21页_701kb_701kb

Macro Report Summary: Trump's Short Term Agenda and Its Impact on China

Core Content

This report analyzes the short-term economic agenda of Donald Trump's administration and its potential impact on China, particularly focusing on trade and monetary policy implications.

Main Points

• Trump's Inauguration and Policy Focus:

  • Trump is set to be inaugurated as the 45th President of the United States on January 20th, 2016.
  • His 100-day plan emphasizes "America First" policies, with a focus on trade, energy, regulation, national security, immigration, and ethics.
  • Economic policies are expected to take more time to implement compared to social policies.

• Key Elements of the 100-Day Plan:

  • Trade: Withdrawal from the Trans-Pacific Partnership (TPP) and negotiation of bilateral trade deals.
  • Energy: Removal of restrictions on shale and clean coal to boost domestic production.
  • Regulation: A policy of eliminating two regulations for every one new one.
  • National Security: Protection of critical infrastructure from cyber and other attacks.
  • Immigration: Investigation of visa programs that are perceived to undercut American workers.
  • Ethics: Implementation of a 5-year ban on former officials becoming lobbyists and a lifetime ban on lobbying foreign governments.

• Fiscal Policy:

  • The Ryan tax plan is expected to be a key fiscal stimulus, with tax cuts for high earners and corporations.
  • The plan may take several months to implement, following historical patterns of tax reforms under previous administrations.
  • The infrastructure investment plan is projected to be around USD 1 trillion, though it is criticized as favoring private interests over public needs.

• Monetary Policy Impact:

  • While Trump's policies do not directly influence monetary policy, they may keep the Federal Reserve on track for rate hikes.
  • Fiscal stimulus and rate hikes may be at odds, with potential political pressure on the Fed.

Key Forecasts

Impact on China

• Trade Friction:

  • Sino-US trade friction is expected in the medium term, driven by Trump's protectionist stance.
  • Trump's trade cabinet includes China hawks, increasing the likelihood of trade conflict.
  • The US has significant unilateral trade powers, which could be used to impose tariffs on China and Mexico.

• Potential Tariff Scenarios:

  • Tariffs on Chinese exports could significantly impact trade balances and GDP growth.
  • A 5% tariff could reduce exports to the US by around USD 13 billion, while a 45% tariff could lead to a USD 48 billion reduction in the trade balance.
  • The report suggests that the market may be overly optimistic about the implementation of Trump's policies, and that Sino-US bilateral ties could face friction.

• RMB Impact:

  • The RMB may be affected by the direct impact of Trump's policies on USD strength.
  • The possibility of labeling China as a currency manipulator could create short-term uncertainty, but actual policy moves may lack significant teeth.

Conclusion

• The report emphasizes that while Trump's policies are ambitious, their implementation is likely to be delayed, and their impact on the economy will be felt over a longer period.
• The potential for trade conflict with China is noted, though the market may underestimate the likelihood of such friction.
• The report concludes that the market's optimism about Trump's economic agenda is misplaced, given the hurdles and uncertainties involved in policy implementation.