TOKYO: Three in four Japanese companies expect US-China trade frictions to last until at least late this year, a sharp contrast to market hopes that presidents Donald Trump and Xi Jinping might soon strike a deal to end their damaging trade war, a Reuters poll found.
And nine in 10 think China's economic slowdown will persist at least through late this year, with more than half anticipating the world's second-largest economy will slow further in 2020 or beyond, the monthly Reuters Corporate Survey showed, report agencies.Japan's economic expansion under the stimulus policies of Prime Minister Shinzo Abe is sputtering just as it vies to become the country's longest postwar boom, with export demand slumping in major markets, especially China.
The trade war between the global titans - Japan's key export markets - has already curbed world trade, dealing a blow to the export-reliant Japanese economy. Japanese manufacturers depend heavily on customers in China to buy their products, especially the parts and equipment that reach China's factories and fuel its domestic and export growth.
Global financial markets have been buoyed by hopes that Trump and Xi could soon iron out a deal, ever since Trump delayed a threatened March 1 tariff hike. Treasury Secretary Steven Mnuchin said last week both sides were "working in good faith" to try to reach a deal "as quickly as possible".
Japanese firms, already suffering collateral damage from the row, are not optimistic about a quick resolution.
"In terms of negotiations on tariffs and trade imbalances, they may head to resolution by this year's end. But if it's substantial friction concerning hegemony, China and the United States will remain locked in dispute for coming 15-25 years," a manager of an electrical equipment maker replied in the survey.
"We hope the trade war won't morph into global recession," wrote a steel maker manager.The Reuters survey found 31 per cent of companies expect the trade war to end in the second half of this year and 45 per cent saying it will persist to 2020 or beyond.
The Corporate Survey found Japanese firms are increasingly feeling the pinch from the US-China trade friction, although the overwhelming majority do not plan to move their operations out of China.
Compared with a similar survey in October, in which one-third of firms said they were affected by the trade war, the latest poll found 52 per cent were being hit.
"Demand for electronics parts and cars is cooling, which we are afraid will curb growth," wrote a chemicals maker manager.
"Those who ship goods to China and manufacturers in the country are suspending or cancelling investment plans," wrote a machinery-maker manager.
The Reuters Corporate Survey, conducted monthly for Reuters by Nikkei Research, polled 479 large and midsize firms with managers responding on condition of anonymity. Around 230-243 answered the questions on trade and monetary policy. Corporate fears of damage from the trade war and China's slowdown are feeding growing expectations that the Bank of Japan will maintain its massive stimulus for some time.