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HONG KONG: Under the new Obama administration, there could be some friction between the US and China over financial issues and trade policy, according to some analysts who spoke to Channel NewsAsia.
However, they also expect that any tension will be short-term, as both parties realise that a healthy business relationship is mutually beneficial.
Asian leaders are watching to see if a new US president, and a Democrat in power, will be good for business in the region. One main area of focus is how America's relationship with China will evolve.
The incoming US president has been talking tough on trade and copyright infringement, and also accusing China of currency manipulation. This could potentially lead to a bump.
"I think that in the first one or two years, the trade relationship between Asia and the US could be... going backwards. But after one or two years, it will be back to normal," said a finance professor at the Chinese University of Hong Kong, Raymond So.
Obama's slogan of "change" has raised some uncertainties of how it will affect major Asian capitals.
But experts say when it comes to the US and China, both powerhouses are well aware they need each other's cooperation, and analysts say the US will need China's help to tackle the global financial crisis. On the other hand, the US is a key market for Chinese goods.
Professor So said: "As long as China is still holding a lot of US assets, that means the US government (and) the US people still have the capital coming into the market.
Another way is the Chinese corporations may start to expand overseas by acquiring US corporations. And China realizes that they need the US investors to develop their own markets as well - in such a way that they know they cannot live without the other."
In the short-term, analysts say China is likely to allow its currency, the yuan, to appreciate slightly against the US dollar as a gesture of goodwill towards the new US administration.
- CNA/yt
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