Every day the trade war with the US is increasingly affecting China. Brave statements by officials about the absence of any consequences for the country's economy remain empty. In fact, the situation looks very different. The recent failure of the largest Chinese bank is another confirmation of the unenviable position of China in this tariff war.
Industrial & Commercial Bank of China Ltd planned to sell dollar bonds in the US market, but faced lack of demand. No one wanted to buy ICBC dollar notes. US investors did not only ignore or fail to notice this offer, but refused to do so because of fears caused by the trade dispute escalation. In general, the interest in Chinese offers on the market declined noticeably. As a result, the bank, which tried to realize three-year and five-year floating-rate bonds through its branch in New York, decided not to proceed with pricing.
The bank focused mainly on investors worried about the growth slowdown amid the Fed’s policy tightening. However, concerns about the Chinese economy recession have been more significant. Last month, there was not enough people willing to buy Chinese government bonds. “The negative market sentiment towards Chinese entities outside of Asia - especially in the US - would seem to continue for a while," economist Judy Kwok-Cheung said. “A strong name with a high credit rating should still find liquidity in the market,” she added.
