A heightened US-China Financial War Imperils Global Economy

Just what the fragile global economy didn’t need: An unpredictable escalation in President Donald Trump’s trade war with China, one that spreads the conflict to currency markets, threatens to involve other countries and raises the risk of a global recession.

At a time when growth in the United States and the world is already weakening and Trump has said he’ll impose new taxes on hundreds of billions of dollars of Chinese imports, Beijing is halting purchases of US farm goods and the two sides are trading punches over the value of the U.S. dollar against the Chinese yuan. The heightened hostilities could hobble world economic growth by depressing financial markets, discouraging trade and elevating uncertainty for businesses trying to decide whether and where to situate factories, buy supplies and sell products. When companies across the world lose confidence or certainty about global trade policies, they tend to postpone plans to invest, expand and hire. Spread across the global economy and over time, those trends can trigger a severe economic economic downturn.

“President Trump is playing with fire here, and recession risks are very high,”      said Mark Zandi’ chief economist at Moody’s Analytics. Barely a month ago, Trump and President Xi Jinping had announced a truce in their rancorous dispute over allegations that Beijing steals and forces foreign companies to hand over trade secrets, unfairly subsidizes Chinese companies and engages in cyber-theft of intellectual property. The cease-fire broke last week when Trump, professing frustration that 12 rounds of negotiations had failed to break the impasse, said he would impose tariffs Sept. 1 on the $300bn of Chinese imports that he’d previously left untouched.


Source from: The Peninsula Qatar