NEW YORK – On top of tumbling stocks, an embattled property market and a struggling economy, there is at least one more thing keeping domestic Chinese investors up at night: a potential win by former United States president Donald Trump in the November presidential election.

That is one of the findings by Goldman Sachs after talking with its onshore clients – which include mutual funds, private equity funds and asset managers at insurance firms – in Beijing and Shanghai over the past week. 

“The most frequently asked questions among local investors include implications for China should Donald Trump become the next US president,” the Wall Street bank’s economists wrote in a note on Feb 2.

Their concerns did not come out of nowhere. Trump is weighing options for a major new economic attack on China if re-elected, the Washington Post reported on Jan 27. The Republican front runner has endorsed revoking China’s “most favoured nation” status for US trade, a move that could lead to US tariffs on Chinese imports of more than 40 per cent, according to the Post.

Trump has discussed with advisers the possibility of imposing a flat 60 per cent tariff on all Chinese imports, the Post reported. On Feb 4, he told Fox News that “maybe it’s going to be more than that”. 

But Mr David Firestein, president and chief executive officer at the George H. W. Bush Foundation for US-China Relations, does not expect the US election to have much impact on ties between the two countries. 

“Whoever wins the 2024 presidential election, whether that’s Biden or Trump, I don’t think there’ll be a difference in the way the US approaches China – whether it’s US investment, technology transfer or trade,” the former American diplomat said.

“The political climate in the United States in terms of China is going to be very similar to what it has been over these last eight or nine years, irrespective of whether Biden or Trump wins. When Biden came in, he essentially not only embraced Trump’s policies, but (also)... largely doubled down on them.” 

As for Trump implementing new tariffs, “how seriously to take Trump’s proposal is a question mark”, he said.

Stocks tumbled last week as a sense of panic gripped Chinese investors on Feb 2. Traders could not pinpoint any fresh impetus behind the moves, but cited concerns about forced sales by leveraged shareholders as among the reasons for the sudden acceleration of losses.

The onshore benchmark CSI 300 Index ended the period down 4.6 per cent, its biggest drop since 2022, while the Shanghai Composite Index lost 6.2 per cent in its worst week since 2018.

Local investors looking forward to China’s economic prospects for 2024 did not offer much solace. When asked by Goldman to rate their outlook for the year using a scale from zero to 10 – where zero was equal to the difficult 2022 Covid-19 lockdown period and 10 to the first quarter of 2023 when China reopened and the last positive quarter for its equities market – half of the 12 local investors who answered said zero. The rest of the investors gave an average score of three.

Other than the Trump factor, local Chinese investors also wanted to learn what would trigger more aggressive policy easing in Beijing, and offshore investors’ views about Chinese stocks after the persistent sell-off, according to Goldman. 

In comparison, offshore investors’ concerns centred on economic fundamentals, including whether the property market has bottomed and how policymakers can fight deflation. BLOOMBERG