The Trade War is already taking its toll

Bloomberg
Trade War James Alexander Michie

ILLUSTRATION: PETER CROWTHER ASSOCIATES LTD.

It is no secret to anyone that for some time now, there has been a commercial war between the United States and China. And it has already begun to take its toll, where everyone involved with these nations has been affected.

But now directly China is already in a crisis. In fact, it has been said that if the second largest economy resolves the current slowdown, it will remain mired in a debt-driven depression.

This is causing severe concern in the world’s investors. Being that they are now directing their worried gaze towards China. And with all reason, being that the economic growth in the third quarter sank to 6.5 percent. This is established as the slowest pace from the depths of the global financial crisis in 2009.

Facts that affirm the crisis in China

The economic war has caused that those involved with the nations that face it are severely affected. There are several examples that undoubtedly affirm this. As well as that car purchases fell last year for the first time in more than two decades. Apple Inc.’s warning in early January that iPhone sales in China were sinking alerted the world to how the slowing Middle Kingdom would reduce global growth and corporate profits.

Do not forget that even after a recent rebound, the stock market in Shanghai has plummeted by more than a quarter since its peak in 2018. While tariffs on Chinese exports to the United States imposed by President Donald Trump They are beginning to damage the country’s factories. A sharp and unexpected drop in imports in December indicated how sharply the economy is slowing. Which led Beijing to reduce the volume of its bravado and negotiate with Washington to defuse the conflict.

Possible temporary solution

A commercial pact may result. This could be a possible solution that can calm down investors, and perhaps even stimulate economic growth. But this would only be temporary. Being that despite this, it would not put an end to the evils of China. While tariffs are a nuisance, the real problems are deeper, integrated into China’s financial structure. And in fact, China is already in crisis. And it is a complete crisis, with gutted banks, bankrupt companies, and state bailouts.

Read more.

Source: Michael Schuman | Bloomberg

Leave a Reply

Your email address will not be published. Required fields are marked *