Future US policy unclear following election

Donald Trump's surprise victory will probably bring with it more uncertainties about US economic policy, which analysts say underlines the importance of portfolio diversification for investors and Chinese companies.

Analysts says Trump's lack of governing experience and his inconsistent policy pronouncements during the political campaign could make it difficult to predict future US trade and investment policies.

They add that it will be important for companies and investors to monitor who Trump appoints to key offices in Washington.

"Given Trump's limited background in politics, markets will look to his appointments for top administrative posts for clues about his policy agenda. The result underlines again the importance of investment diversification, both in terms of regions and asset classes," says Mark Haefele, global chief investment officer of wealth management at UBS AG.

In his victory speech, Trump said the US would "deal fairly with everyone" and he would seek "common ground, not hostility, and partnership, not conflict".

China has been a prominent investor in the US as Chinese companies have made a slew of large acquisitions of US businesses, including General Electric's appliance business, Strategic Hotels & Resorts, technology company Ingram Micro and film studio Legendary Entertainment.

According to data from the Rhodium Group, a research firm, Chinese companies invested a total of $18 billion (16 billion euros; 14.5 billion) in the first half of 2016. More investments could be expected if Beijing and Washington reach final agreement in ongoing negotiations for a bilateral iInvestment treaty, analysts say.

They add that the initial impact of the Trump victory on the current growth trend of Chinese direct investment in the US will not be substantial. But they warn about the potential rise of protectionism in US economic policy, which could negatively affect bilateral trade and investment.

"It can be expected that US trade and investment policy will likely tilt more toward deglobalization and protectionism, which is becoming increasingly popular internationally," says Wu Qing, a financial researcher at the State Council's Development Research Center.

Raymond Yeung, chief China economist at ANZ Group, says the immediate impact of a changing presidency in the US on China will not be as large as perceived.

lixiang@chinadaily.com.cn