On July 18, 2024, at the Republican National Convention (RNC), former U.S. President Donald Trump officially accepted the GOP presidential nomination. In his speech, Trump emphasized improving local employment and pledged to terminate Biden's electric vehicle (EV) mandate on his first day in office. He also vowed to promote American manufacturing through tariffs and other policies, preventing the establishment of factories in countries like Mexico and China, and boldly claimed he would once again take control of the automotive industry to "Make America Great Again" (MAGA). However, Trump dismissed scientific evidence on climate change, calling it a "Green New Hoax." These policies and statements are poised to have profound impacts on the global economic landscape.
1. Dollar Interest Rate Cuts and U.S. Economic Impact
Stimulating Economic Growth vs. Inflation Risk
Cutting interest rates aims to stimulate economic growth but could also exacerbate inflation pressures, particularly burdening the living costs of middle- and lower-income groups. This may lead to more manufacturing and job positions returning to the U.S., achieving Trump's MAGA goals. However, in the long run, the risk of inflation remains high, potentially challenging the stability of the U.S. economy.
Employment and Manufacturing Returning to the U.S.
Trump's policies may encourage more companies to relocate production lines back to the U.S., creating jobs and revitalizing American manufacturing. However, these policies could also lead to retaliatory tariffs from trade partners, further intensifying global trade tensions, especially with increased tariffs on Chinese imports under a new administration.
2. Financial Maneuvering Between China and Hong Kong
RMB Internationalization and Hong Kong's Financial Status
As Hong Kong accelerates its decoupling from the U.S. dollar, the internationalization of the RMB might speed up, positioning Hong Kong as China's new financial gateway. This shift could enhance Hong Kong's status in China's financial market but also increase market uncertainty.
Financial Confrontation Between China and the U.S.
China holds a substantial amount of U.S. bonds, and a large-scale sell-off could raise U.S. Treasury yields, causing global financial market volatility. This financial standoff would further escalate economic tensions between China and the U.S., posing a threat to global economic stability. Japan, the largest holder of U.S. debt, could face significant pressure on its overseas investments and domestic economy.
3. Regional Economic Integration in Asia
Reorganizing Supply Chains
Chinese private enterprises rapidly relocating production lines overseas could drive the reorganization of regional supply chains in Asia. This process might foster cooperation among Asian economies, enhancing the overall competitiveness of the region. The third wave of Chinese entrepreneurs setting up factories and production lines in Southeast Asia represents the final deployment phase.
Hong Kong as a Digital Economy Gateway
Hong Kong is poised to play a crucial role in the digital economy and data security, becoming a key gateway for Chinese enterprises expanding globally. This will strengthen Hong Kong's position in the global digital economy while raising concerns about data security and economic sovereignty. The "Hong Kong Dollar" stablecoin's reliance on the U.S. dollar will gradually diminish, shifting to a basket of assets like the RMB and Euro.
Trump's re-election could signify profound shifts in the global economic order, intensifying the interests' game among different countries and regions. Factors like dollar interest rate cuts, RMB internationalization, and regional economic integration in Asia will have far-reaching impacts on the global economy. The future direction requires continuous attention and in-depth analysis.
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