The Chinese yuan is strengthening on Tuesday after a Wall Street giant forecast that the worldâs second largest economy will soon become the biggest economy in the world by 2030. The currencyâs gains were capped on the intensifying trade dispute between Beijing and Washington, as well as a report that China may scrap a popular home pre-sale system.
According to a study by economists at HSBC Holdings Plc, China is set to overtake the US as the worldâs largest economy in less than 15 years. The report suggests that Chinaâs gross domestic product (GDP) will stand at $26 trillion in 2030, up from $14.1 trillion in 2018.
The financial institution also forecast that China will the biggest contributor to global growth over the next decade.
So, what about the US? While its GDP will rise in this time-span, the economy will expand more slowly, from $20.4 trillion today to $25.2 trillion in 2030.
Despite President Donald Trump claiming that China will not surpass the US, the HSBC numbers do mirror that of the International Monetary Fund (IMF)âs report in July that projected China will become the largest economy in 12 years.
Speaking in New York on Tuesday, President Trump warned that the US will not tolerate unfair trade from friends and foes alike, adding that the trade imbalance with Beijing is âunacceptable.â
We will no longer tolerate such abuse. We will not allow our workers to be victimized, our companies to be cheated and our wealth to be plundered and transferred.
Over the weekend, Chinese officials canceled planned talks with their US counterparts in Washington this week. The sudden cancellation came after the White House imposed new tariffs on $200 billion worth of goods, prompting Beijing to retaliate with their own series of import taxes.
Analysts are warning that the Chinese housing market could take a hit should the government scrap a popular property pre-sale system, a major source for construction companies and builders to finance their projects. Investors sold off on the news because they fear that some construction firms could shut down and new residential and commercial properties could fall.
The USD/CNY currency pair tumbled 0.18% to 6.8669, from an opening of 6.8793, at 16:00 GMT on Tuesday. The EUR/CNY rose 0.04% to 8.0843, from an opening of 8.0820.
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