China braces for trade war with usa

china braces for trade war with usa

China braces for escalation in trade conflict with u.S. In view of the recent weakness of the chinese currency, the central bank in peking assured on tuesday that it will not stand idly by and watch the yuan fall in value.

Chinese securities regulator prepares to respond to market turbulence. China’s censors also instructed the state-controlled media to "downplay" the dangers of a trade war between the two major economies, according to instructions quoted by the china digital times.

Newspapers called the recent losses on china’s stock markets "irrational" and an "overreaction". Investors have been urged not to panic in the face of the threat of escalation. "We have been expecting this for a long time and have been preparing for it," wrote the rough business newspaper "jingji ribao" and expressed confidence: "the impact on the chinese economy will be within a manageable range."

This friday, special U.S. Tariffs of 25 percent on 34 billion U.S. Dollars worth of chinese imports are scheduled to take effect. Levies on another 16 billion worth of chinese goods are due on 13. July were considered and could come into force at the beginning of august. In turn, china has announced immediate punitive tariffs on imports from the U.S. At similar levels. If the retaliation occurs, US president donald trump has threatened further special levies on imports from china worth 200 billion US dollars. This would affect half of all exports from china to the U.S.

The dangers of such a trade war between the two major economies unsettles investors. Following sharp falls in china’s stock markets on monday, the hang seng index in hong kong fell by more than three percent early on tuesday after a holiday to its lowest level in nine months. It recovered slightly in the course of trading and closed down 1.71 percent. "Investors continue to be risk averse, selling their shares before the deadline for the entry into force of the tariffs of the united states," said ben kwong of KGI securities.

The tense situation on asia’s stock markets calmed down a little on tuesday. Chinese central bank’s statement to keep the currency stable has improved investors’ mood, traders said. The stock markets in shanghai and shenzhen closed up again. The shanghai composite index was 0.41 percent higher, and the shenzhen component index was 0.45 percent higher than the day before. This year, however, the important index in shanghai has fallen 12.8 percent, including a good nine percent in the last four weeks alone.

China will keep the yuan stable at a reasonable, equilibrium level, central bank chief yi gang assured in an interview with the "china securities journal". The central bank published the text on its website. The central bank is closely monitoring price movements in the foreign exchange market, yi said.

The chinese currency had come under considerable pressure. Experts cite reasons outside china such as the trade conflict with the u.S. And rising interest rates in the united states on the one hand. However, reference is also made to economic weaknesses in china itself, such as the recent visible signs of an economic slowdown.

The exchange rate of the yuan does not move freely, unlike other currencies such as the dollar or the euro. Rather, the central bank sets a price level each day around which the price is allowed to move within a fixed range. However, in setting the central rate level, the central bank is more strongly guided by market conditions than in the past.

Observers pointed out that a weak yuan could, however, also help to make china’s exports cheaper and thus cushion the impact of a trade war. But a rapid devaluation of the yuan is seen as potentially dangerous. When china attempted to devalue and leave the perception of strength to market forces in the fall of 2015 and the beginning of 2016, there was worldwide turmoil.

In the escalation of the trade dispute, china wants above all to maintain stability. The state media has been instructed not to broadcast any remarks by U.S. President trump, other U.S. Government officials, or any reports from U.S. Media without first obtaining approval. This phase of the trade conflict with the united states requires "calm and rationality," the instructions said, according to "china digital times". Negotiations have ceased and countermeasures have been rolled out specifically to "divide" the various groups in the U.S., it continued.

Leave a Reply

Your email address will not be published.