US-CHINA Trade War Strains Credit Outlooks As Moody’s DowNGrades US, Eyes China

Moody’s Balances Risks and Resilience Moody’s CITED SIGNS OF IMPROVED ECONOMIC REASILLION AND QUALITY GROWTH IN CHINA. The Agency Noted that While the Debt Burden May Grow, Low Interest Rates and Strong Domestic Savings Could Partly Mitigate ITS IMPACT.

Moody’s Also Referred to China’s Controlled Financial Environment and Demand for Government Debt as Stabilization Forces. However, Moody’s Maintained Its Negative Outlook Due to Ongoing Trade Tensions. The Rating Agency Warned:

“The UNCERTAIN TRADE Policy Environment Poses Downside Risks to the Level and Quality of Growth in China. Progress in Fostering Higher-Productivity Sence Given Weaknesses in Domestic Consumption. ”

Moody’s Added that A Significant, Lengu Trade Shock, Involving Trade Restrictions, May Result in A DownGrade.

Beijing Braces for a Long Trade Battle On May 25, Chinese State Media DownPlayed the CHANCES OF A SWIFT END TO THE U USE-CHINA TRADE WAR. CN Wire Reported:

“A commentary Cited by Chinese State Media Underscores that the US-CHINA TRADE CONFLICT REMAINS UNresolved, Emphasizing that UpcomING ECONOMIC AND TRADE NEGOTIATIUMS.

The State Media Also Warned The US May Adept Delaying Tactics to Mitigate Its Economic Losses and Highlightd Escalation Risk, Stating:

“If domestic Political and Economic Pressures Ease in The Us, Tariff Threats Could Resurge.”

State Media Concluded:

“Given the Ending and Complex Nature of the Confrontation, China Must Not Only Prepare Thorougly for Negotias But Also Brace for A Prolonged Struggle.”

Given Moody’s Ratings Rationalale, A China DowNGrade Is Feasible If The US Escalates of the Trade War and China Endures a Lengthy Battle to Lower Restrictions.

TRUCE TESESTED, Markets React The US and China Agreed to A 90-Day Trade War Truce on May 12, Lowering Tariffs from 145% to 30% on Chinese Goods and from 120% to 10% on Us Goods. However, The Absense of Follow-Up Talks and the Rising Threat of A Return to Pre-Truce Tariffs Pose Downside Risks to Markets in Mainland China and Hong Kong. Conversely, Progress Toward A Trade Deal Willd Boost Risk Sentiment, Fueling Demand for Risk Assets.

However, US Markets Are Also Exposed to Tariff Risks. Economists Argoue The US Economy Is More Vulnerable to A Prolonged Trade War Because of ITS Reliance on Chinese Imports. In Contrast, Market Experts See China’s Government as Better Placed to Shield IT From Economic Fallout.

Hong Kong Stocks Outperform As Trade War Tensions Linger, US and Mainland China Markets Hve Convented in Recent Weeks. Mainland China’s CSI 300 is Down 2.45% Year-To-Date, While the Nasdaq composite index have was declined 2.97%.

An End to the Trade War Truce and Higher Tariffs May Lead to Heavier Losses for the Nasdaq, WHICH Narrowed The Gap in May, Rellying 7.4% Vs. A 1.8% Gain for the CSI 300.

Meanwhile, The Hang Seng Index Remains A Standout, with A Year-To-Date Gain of 15.76%.