Asian stock markets fell sharply on the start of this week’s trading as the two biggest economies in the world saw an escalation in the trade war feud after the U.S. administration announced that they are planning to impose an extra 25% tariff on thousands of Chinese products.
That’s not all…
In addition, duties are in the process of being added by Washington on almost everything else that is sent by China to the U.S. which is valued around $300 billion.
The dispute is over technology and trade and will put further pressure on an economic recovery in China. Last Friday, the negotiations between high-level officials from both China and the U.S. ended without any deal.
The U.S. 25% tariff, worth $200 billion, had companies bracing themselves for a tit for tat response from Beijing and how they might respond.
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China will never surrender
According to a news briefing from a spokesman from China, Mr. Geng Shuang who said that China will never surrender to external pressure and hopes the United States will meet them halfway in addressing one another’s legitimate concerns.
He went on to say that China was resolute and able to safeguard their own legitimate rights and interests.
Threats to impose countermeasures by China, by raising tariffs on approximately $60 billion of US exports are yet to be announced, Mr. Shuang said that coining a U.S. expression for the details ‘wait and see’ and continue to pay attention.
Nationalistic propaganda campaign
Latest news reports in Hong Kong reported a fierce new propaganda campaign from China’s government-controlled media against U.S. greed that said that China will survive the trade war with the U.S.
In strong nationalistic language, in on-air editorials and a series of opinion pieces, they endeavored to reassure a shaky domestic audience that the higher tariffs imposed by US President Donald Trump can be weathered by China.
In an editorial published by the mouthpiece of the Communist Party, People’s Daily and Xinhua News Agency, they allegedly said that China is legitimately fighting to defend itself while the US is fighting for greed and arrogance.
The media said it is a people’s war.
Last July, Mr. Trump raised tariffs after complaints from companies that China was stealing or pressurizing them to hand over technology.
Now, following the hikes last Friday, forecasters are warning that this could disrupt a recovery in China that appears to be gaining traction.
Higher government spending and bank lending saw China’s economy holding steady at 6.4 percent over a year earlier in the last quarter.
Due to the lopsided U.S.-China trade deal, China is running out of U.S. imports it could penalize and in addition, regulators have been slowing down clearance by customs for shipping and processing of business licenses.
VP of the U.S. China Business Council, Jake Parker reportedly said that before picking their next move, it appears that officials are examining the potential impact it will have on the Chinese economy.
Aggressive retaliatory actions to China’s response could see companies moving their operations out of China which is worrisome for officials.
Larry Kudow: China will suffer more
Top economic adviser to President Trump, Larry Kudlow said in an interview that the recent increase in tariffs on Chinese goods will cause hardship not only for China but consumers and American companies as well.
He said that both sides will suffer but that China’s Gross Domestic Product will suffer more from the tariff hike of 15 percent depreciating export market.
President Trump said in a tweet on Monday morning that there is no reason for consumers in the U.S. to pay the tariffs that come into effect in China.
There is no reason for the U.S. Consumer to pay the Tariffs, which take effect on China today. This has been proven recently when only 4 points were paid by the U.S., 21 points by China because China subsidizes product to such a large degree. Also, the Tariffs can be…..
— Donald J. Trump (@realDonaldTrump) May 13, 2019
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