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Thursday, 11 August 10:46 (GMT -05:00)

Business And Politics News

US-China Trade Conflict May Trigger Another Global Financial Crisis

Beijing and Washington are one step away from escalating their trade conflict. The confrontation may harm the entire global economy. Some experts belive that the trade war may also trigger another global financial crisis. At this point, the parties seem to have come to a standstill, which is why the chances of the conflict escalating into a move severe trade war are still growing.
For those of you who don't remember, the conflict started in June 2018 when the United States imposed 25% duties on Chinese products to the amount of 50 billion dollars. This was followed by 10% duties on Chinese products to the amount of 200 billion dollars 4 weeks later. Later on, the parties decided to have talks  but the talks see, to have failed to resolve the problem so far. To make things even worse, in rearly May 2019, Washington raised the 200-billion-dollar 10% duties all the way up to 25% while not denying the likelihood of imposing duties on the rest of the Chinese export (300 billion dollars). Beiging responded with imposing similar 25% duties on the American export to the amount of 60 billion dollars.
The world is on the verge of yet another global crisis
The mutual raises of import duties triggered a stock market crash, both on America and Asia. International experts have been talking about ti for the last couple of years. However, this time the threat is real and may come true in the near future.
Some experts think another major crisis is highly probable. The trade war may become one of the key triggers. The global production is slowing down. This is likely to end up with a global economic recession. This standpoint is shared by a big number of international experts.
Some of them also say that Donald Trump is to be blamed for that for the most part. The thing is that Trump is a businessman and that's why he keeps on using the same tricks - the tricks he used to when making deals - even today when playing in the international arena. Still, applying those tricks to international relations cannot be called a good idea and may end up with unexpected results. They say that seeing China as a big rival is not the best approach.
The experts hope that there are smart people in Trump's administration who will eventually manage to make Trump understand how damaging such trade wars can be. This leads us to belive that China and the United States will avoid escalating the trade conflict. Still, even if there is no escalating the trade war, the global crisis may still happen, mainly due to a slowdown of the CHinese economy, especially as the trade war is going on amid the growing amount of internal problems in the Chinese economy and financial system. The domino effect may trigger a default in the Chinese corporate sector.
Simply put, the trade sanctions coupled with internal problems may slow the Chinese economic growth to as little as 6% a year against last year's 6.6%. If that's the case, this is going to be the lowest economic growth in 28 years. In the case, the forecast for the global economic growth will drop by 0.5%
All in all, the experts assume that if the trade war isn't over within the next couple of weeks, international experts will start downgrading their forecasts for the economies of the USA, the EU, and China. So, the only way out is to end the trade wars as soon as possible.


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Text: Елена Тараканова
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