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US-China Trade War |

Published in Bulgaria - Financial analysis - 7 - 08 Aug 19 07:19


https://lh3.googleusercontent.com/YVH8tzuBnELfqbHp_DD2PLZcUtQb6-lBUsRortdq6kWHaNdhGYj8OaWa-e_QLqaqUHjPWdwGNSLB8gI2YsQrlh4kU9s5i77SgC7SLHqiMvHx-jfz6ZLI23KxLNAYqyDa3dl3oCw6


The US and China have been locked in an escalating trade battle for a year now. According to the IMF an all out trade war could shave nearly 2% of Chinas GDP growth in the next 2 years. Trumps trade measures are already hurting China, but will they force the country to open up? Trumps strategy seems to have succeeded so far. Before the tarrifs Chinas economy had already shown signs of slowing down. One year on, the face-off between the worlds two largest economies has witnessed Chinas GDP growth fall from 6.8% to 6.6%. Thats the weakest GDP pace since 1990. 2019 is the year when the scheduled tarrifs on chinese imports will go up and so thats the year when these costs will become more real.  Chinas small and medium-sized manifacturing companies, traditionally the backbone of the economy are already feeling the negative impact of the imposed tarrifs. Danny Lau Tat Pong, Managing director of the Kam Pin Industrial HK ltd said that he expects to lose 30% of its clients as a result of the 25% tarrifs, moreover with 10% tarrifs on aluminium, the company is about to lose US orders and net revenues could fall from 16 to 11 billion dollars. According to experts the trade war is gonna accelerate the process of businesses moving out of China.  

Donald Trump’s claim that his protectionist measures are hurting China more than the US has received support from the International Monetary Fund in new forecasts showing how a fresh slowdown in the global economy has been concentrated in emerging economies.
The Washington-based IMF said the outlook was gloomier than it envisaged three months ago due to the tit-for-tat tariff war between the world’s two biggest economies, Brexit uncertainty and the impact of sanctions against Iran on oil prices.
In an update to its half-yearly World Economic Outlook, the IMF said it expected global growth to be 0.1 percentage points lower in both 2019 and 2020 than it envisaged in April, at 3.2% and 3.5% respectively.

The Fund’s country-by-country breakdown upgraded its forecast of US growth this year from 2.3% to 2.6% but downgraded China from 6.3% to 6.2%.
“In China, the negative effects of escalating tariffs and weakening external demand have added pressure to an economy already in the midst of a structural slowdown and needed regulatory strengthening to rein in high dependence on debt.”
Emerging and developing economies as a whole are now expected to grow by 4.1% this year – a cut of 0.3 points from April – with a slower pace of expansion pencilled in for Russia, India, Brazil and Mexico.
The forecasts came amid growing optimism that the US and China could soon settle their differences. Shares rose in Asia and Europe after it was reported that the US trade representative Robert Lighthizer and the treasury secretary Steven Mnuchin will meet China’s vice-premier, Liu He, next week.
The IMF said growth had been better than expected in the US and Japan in the first half of 2019, while one-off factors that had hurt growth in the eurozone in 2018 (notably, adjustments to new auto emissions standards) had appeared to fade as anticipated.
But despite upgrading its US growth forecast, the IMF fired a warning to the White House about the risks of a full-blown trade war.
“Multilateral and national policy actions are vital to place global growth on a stronger footing,” the IMF said. “The pressing needs include reducing trade and technology tensions and expeditiously resolving uncertainty around trade agreements (including between the UK and the EU and the free trade area encompassing Canada, Mexico and the US). Specifically, countries should not use tariffs to target bilateral trade balances or as a substitute for dialogue to pressure others for reforms.”

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Comments (7)

08 Aug 19 07:20
Elon Musk

US-China Trade War https://www.edominations.com/en/article/10994

08 Aug 19 07:27
Jjperdido

Good job

08 Aug 19 08:14
Safer

Interesting

08 Aug 19 09:06
Winston Hope Smith

Who pays the tariffs imposed on China... answers on a postcard to Trump (hint... not the Chinese)

08 Aug 19 10:56
Elon Musk

Well its well known who pays but the sanctions are achieving its goals so far, something must be done about China, the yuan is at all times low, china is devaluating currency...so far so good, you cannot expect to have a trade battle with the 2nd world economy and win it without any negatives.

08 Aug 19 13:05
Winston Hope Smith

I dont think Americans know who is paying and it is them who are paying.

10 Aug 19 10:14
RAMBOTR

Good job