GDP Development of China and USA in terms of mutual sanctions and COVID-19

Institute of Technology and Business in Ceske Budejovice, School of Expertness and Valuation, Okruzní 517/10, 370 01 Ceske Budejovice, Czech Republic

^* Corresponding author: vrbka@mail.vstecb.cz

Abstract

Research background: China’s share in the global economy has experienced a swift growth since opening up and reforming the country’s foreign policy in 1978. USA sanction on China has so far concentrated on a heap of issues including China’s enormous exchange shortfall with the U.S., currency control, constrained market access, licensed innovation robbery and security issues identified with Huawei. Also, USA sanction on China has so far lead to a decrease in exports and outflow of FDI, reduce in the inflow trade and investment, and apparently hinders the Chinese GPD growth and diminished its currency exchange rate.

Purpose of the article: The aim is to predict the future development of the GDP of the China and the USA and to estimate their further development through the prism of mutual trade sanctions and COVID-19.

Methods: The data collection demonstrates the course of a time series of a daily RMB exchange rate development from the beginning of 1992 to June 2020. Furthermore, it represents the time series of a quarterly development of the Chinese GDP for the same time period. Using neural networks, a regression for different variants of the time series delay in connection with the analysis of the USA sanctions is conducted.

Findings & Value added: The GDP of both countries has developed over the last two years, as if sanctions had not been imposed. However, the situation is changing with COVID-19. In this case, it is clear that the impact will be more significant. US GDP will stagnate. PRC GDP will fall.