Can the negotiation go well?

What is the New Year's biggest news so far? The obvious answer is the negotiation going on between China and the US. The market has been optimistic about this negotiation that the market has been up since the negotiation begun. The start of the negotiation of course is a piece of good and exciting news for the global financial market, as it brings some hope of a coming end of the trade tension between the world's largest economies. When the two largest economies are fighting against each other, other economies on the earth will also be hurt. However, here comes another question that how likely the two countries will end the tension between them.

Both countries have incentives to end the tension right now. China is facing an economic slowdown that China wants to end the tension as soon as possible as the economy which depends on exporting is hurt by the ongoing tension and after resolving the trade problem with the US, it is possible to boost up its economic growth. Meanwhile, although the US economy seems not to be affected by the tension significantly as the numbers look good, the US administration is facing a political fight back at home. The administration has been attacked for many political matters; however, the tension that the administration built has been widely attacked by the US business circle which the US president Trump certainly has a special feeling about. Trump has been doing favours for the US business circle and the US wealthy class by cutting their taxes. Moreover, because the tension has a wide negative impact on a wide range of people, this has been attacked by his oppositions. Trump wants to have something to show to American people that he has achieved something by the tension he created. Therefore, the US administration wants to end the trade tension with something they can take credit of.

Therefore, although both countries have incentives to end the trade tension between them, it does not necessarily mean that the tension will certainly end, the outcome depends on how both countries want to exit the situation. I am not very optimistic about the outcome of the negotiation given the aggressiveness we have seen from the US administration.