The global trade environment is in a state of flux. Headlines of evolving trade tensions between the world’s two largest economies have dominated media space and added to the complexity of business environment in Asia Pacific, where over 60% of global trade activities take place.
Business leaders in the region were caught off guard not only by the degree and scope of impact from the trade complexity, but also by the speed at which new events were unfolding on the trade front. The prevailing trade rules were being challenged and old business models were being displaced by new thinking.
China, in particular, is at the epicentre of the trade-induced shock waves. Since the onset of the Sino-US trade disputes earlier this year, the Chinese economy has experienced some setback in response to US inflicted trade sanctions. In October, the People’s Bank of China has lowered the required reserve ratio for most banks by 100 basis points1 to combat market liquidity crunch and slowing GDP growth rate in Q3 (6.5% pa), not to mention the continued weakness of the Chinese yuan and rising level of foreign debts owed by corporations.
The trade conflict has also hurt investor confidence, affected consumer purchasing behaviour, and heightened urge for safeguarding against financial risks, while restricting two-way investment and M&A activities between China and the US, a recent PwC study has shown.2