China’s economy to slow in 2020 but remain robust: Baker & McKenzie’s Cheng

Chair of the world’s largest international law firm, Baker McKenzie’s Milton Cheng, says the firm sees China’s economy moving into a slower phase in which double-digit growth is a thing of the past.

“It's not going to be double-digit growth of that sort anymore, but it's still pretty robust growth for an economy of that size,” Cheng told Yahoo Finance’s Andy Serwer and Alexis Christoforous at The World Economic Forum’s annual meeting in Davos, Switzerland.

While the firm expects that agreement on the phase one trade pact between the U.S. and China will soften some of the dampening growth, it also projects a 20% decline in China’s IPO and M&A activity. The drop, Cheng said, will likely be followed by a boost in 2021.

“What we forecast is that for 2020, it's probably going to be a bit of a softening,” he said. “It's just macroeconomic trends and people being a bit more cautious with trade war sentiments and so on.”

Chinese Vice Premier Liu He and U.S. President Donald Trump shake hands after signing "phase one" of the U.S.-China trade agreement during a ceremony in the East Room of the White House in Washington, U.S., January 15, 2020. REUTERS/Kevin Lamarque

Asked whether uncertainty surrounding the outcome of November’s U.S. presidential election weighs into the firm’s projections, Cheng said it is one of several factors that will influence, but not dictate, investments between the two countries, this year. 

Globally, China is positioning for the long-term.

“The long term plan, whether it’s through the BeltAndRoad initiative, or The Greater Bay Area Initiative, is still forecast for pretty strong growth, going forward, and not just in China but also outward from China,” he said. “Now with the trade truce there was some fear of impact on that, but the trade will flow, whether it flows as much between China and the U.S., it will still flow and it will flow to other parts of the world, if needed.”

Two additional challenges facing China, the Coronavirus and the ongoing protests in Hong Kong against the Chinese government, are less likely to impact the country’s economic growth, according to Cheng.

Though the issues are complex, he said, “Hong Kong is resilient.”

Alexis Keenan is a reporter for Yahoo Finance. Follow her on Twitter @alexiskweed.

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