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Macro Outlook 2Q2020: No Swift Recovery as Demand Remains Weak (Macro Polo, 11 min read) Weak consumer demand, liquidity shortage in the private sector, and export drops will weigh on Q2 growth, with the recovery resembling more a ‘U’ than a ‘V’. Beijing is likely to take more time to consider a medium-term strategy for making growth more sustainable; consequently it has been more conservative on stimulus in the short-run (as that may be a waste of ammunition).
The End of the US-China Relationship (Project Syndicate, 7 min read) Both are trapped in a blame game with no easy escape. The relationship ending could lead to adverse economic and geopolitical consequences. Both economies are deeply codependent. China will lose its largest source of foreign demand and the US a significant supplier of low-cost goods. Politically, the fight for global power may usher us in a new cold war.
Peking University Professor Says Launch of China’s Central Bank Digital Currency Will Be History-Defining Event (China Banking News, 3 min read) Launching the CBDC will help China transition to a cashless society. Compared to paper cash, digital cash can reduce transaction costs and the usage costs of enterprises and residents in other countries. This will promote the internationalisation of the renminbi.