China: China – winter woes and unknown unknowns
Chinese data suggests the trade war is biting. This is focusing minds in Beijing, meaning some kind of deal between Trump and Xi is likely. The key question is whether the damage already inflicted on Chinese domestic confidence can be reversed? Uncertainty is likely to last until Chinese New Year effects wash through the data. But we think that, while the economy is trickier to control than in the past, the Party still has enough levers to maintain growth. That means no renminbi devaluation and domestic headwinds should weigh less on the local equity market.