World stock markets: Where trade war US-China

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Markets are influenced by economic news, but the worst case scenario of much higher rates and much more severe slowdown of world trade has not yet been developed. The current deterioration of U.S. relations with China is exacerbated deflationary tendencies, so a longer cycle of violent recriminations actually has a deflationary impact by slowing the flow of goods and services, not because of inflation due to higher tariffs, as some think.
Trade wars often become hot wars. Therefore, the Chinese remember “the Opium war” to justify today’s trade skirmishes with reference to how the British invaded China and Hong Kong. The current situation with China can still be reversed, but the events of the last three months show that the situation has deteriorated significantly. Perhaps the Chinese want the trade talks have failed, that will allow to devalue the yuan. There was more evidence of this, when the people’s Bank of China allowed the Chinese Renminbi to rise above 7 per dollar.
It is unlikely that the U.S. President wants to curtail global trade, rather he wants to put an end to the predatory actions of the Chinese government. If the Chinese could trade tricky maneuver for 20 years, it is clear that they wanted to continue, but trump is the new owner, and he ain’t respecting old arrangements. Under the Chinese brand of state capitalism in the economy a lot of interference from the state. Because of the high role of state control there is a whole army of state buyers who say where to get the necessary goods and services.
However, there is no state buyers in the United States or any other major economy in the world. If the Chinese wanted to dramatically reduce its trade surplus with the United States, which in 2019 should be more than $ 400 billion, all they need to do is send the state buyers in America. This would cause a big political problem of abandonment of shopping where they bought before. Therefore, such a change can occur in three to five years, but not relatively soon, as required by the administration trump. Much depends on the trade negotiations and balance between trump and his Chinese counterpart, but it is unlikely that the Chinese still have negotiated in good faith in the process.
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