Quarrel, try to agree. and quarrel again. The United States and China have been actively engaged in this since the spring of 2018, when the States decided to increase duties on the import of aluminum and steel from a number of countries, including China, ”writes Kirill Danilchenko in a column on“ Peter and Mazepa ”.
The question of dominance on our humble planet, it is so predictable. And the methods are quite familiar, albeit terrifying in their scope..
TECHNOLOGICAL WAR But not a single metal. Between the two countries also unleashed a techno-war. Here the United States, for example, in August 2019 banned government services from using Huawei equipment, suspecting the company that they are working against the interests of America. In response, the Chinese company has already said that it will switch from Android to the Russian Aurora OS. In the world media, the battles of the two superpowers have been dubbed the " We will talk about techno-battles of the two countries separately, and in more detail.
Lately clashes have escalated due to the fact that both states have moved to action. Last summer, Donald Trump raised import duties on Chinese goods, to which China responded by devaluing the renminbi to the lowest level in 11 years. To put it mildly, not a war, but a battle: only one side has become worse.
Despite the fact that in mid-October 2019, the countries managed to achieve some changes in the negotiations (Trump promised not to introduce new duties for China), in the Middle Kingdom they still doubt that a trade war can be resolved during the reign of the current US president. At the moment, the first two economies of the world have reached the " In Beijing, they said that they can calmly schedule negotiations for November 2020, when the president may change in the US.
However, this interim phase of uncertainty affects the Asian market as a whole. Following the fall of the renminbi, the exchanges of many countries of the Far East collapsed. During the election campaign, Trump claimed that China " The fact is that over the past 10 years, the trade deficit between the two countries continues to grow in favor of China. Simply put, it shows the outflow of capital to foreign markets.
This situation arises at a time when the import of goods and services to a certain country exceeds the export from it.. Although a slight trade deficit is common for countries with a stable economy, it can occur from time to time without harming the development of the economy.. However, long periods of imbalance between exports and imports can create significant economic stress..
Most economists say that in 10-15 years, China will overtake the United States in terms of GDP and its economy will become the largest in the world.. It is logical that any US president can and should be promoted on such a strong external opponent, especially a Republican. And at the same time weaken the enemy so that he does not spread his wings early.
Here, admire the dynamics. Yuan hello sends.
True, because the Americans are also quite interested in the existence of Russia: otherwise, China will receive a rich raw material base and strengthen its power..
HOW AMERICAN YUAN SHOT SHOOTED Eternally, you can look at three things: how the fire burns, how the water flows and how the world gets cheaper as a result of the crisis. The latter, of course, may be the reason for the collapse of the national economy, but it can also make the national economy more competitive in foreign markets..
On September 18, 2019, the US Federal Reserve reduced the rate by 25 basis points: from 2-2.25% to 1.75-2%. The Fed rate is the interest rate at which US banks lend their excess reserves. China also decided to keep up with the money distribution festival and reduced the reserve ratio for banks by 50 points, thereby freeing up about 900 million yuan (a little more than 127 million US dollars). The required reserves ratio is a strictly defined share of the obligations of a commercial bank on deposits attracted by it, which the bank must keep in reserve either in the form of a deposit with the central bank or in the form of cash in its own vaults.
Simply put, this reservation is necessary as a guarantee: the bank will be able to fulfill obligations to its customers. As a result, these actions led to a mutual depreciation of the currencies of both countries..
But how did the real devaluation? Very simple. Banks make money out of nothing when they start buying securities from other financial institutions. And it must be so, it so happened that in China they acquire 80% of government bonds. In other words, banks themselves create a money bubble. Basically, this is the trade in large volumes of goods or, most often, securities at prices higher than usual.
It sounds beautiful, but such measures can solve only short-term and medium-term problems.. Inflating liquidity has its drawbacks: it impedes innovation and creates an improper distribution of capital, thereby reducing productivity growth. And this ultimately leads to inflation.
When the supply of something rises, its price falls, which in turn takes the form of a currency devaluation. Making a lot of money increases pressure on China's currency. However, due to the fact that China has a colossal domestic market, as well as an aggressive foreign economic policy, all of the above leads to the export of inflation to other countries, in particular, to the United States.
In general, the trick is not for long, but it worked. Currencies of Asian countries and not only reacted to the August devaluation. To begin with, for one green George Washington it was necessary to lay out about seven equally green Mao Zedongs. August 5, 2019, the yuan fell in price by 1. 3% (from 6.94 to 7.05 per dollar).
Currencies from other Asian countries immediately reacted to this.. For example, the South Korean won rate dipped 1.5% against the US dollar, and the Indian rupee 1.3%. Asian stock markets also reacted negatively to the fall of the renminbi, which lost 1.6% to 2.85% in different regions. This was due to fears of an escalation of trade conflict between China and the United States.. Note that everything happened on the same day, that is, August 5 (we take into account only 13 time zones between China and Washington).
COME, SAW, AGREED. WHAT IF?
On New Year’s Eve, China and the United States unexpectedly agreed to phase out in a new war.. Of course, this did not begin in December, but in October 2019.. Then the two countries agreed that they would no longer come up with new duties for each other. And at the end of December it became known that both states agreed on the first stage of the cessation of economic battles, agreeing to gradually reduce the amount of duties, which by that time had already reached a total of tens of billions of dollars.
In addition, it turned out that countries are ready to help boost trade with each other.. No other actions on the part of the States and the Celestial Empire have yet been spoken of, however, if this is only the first stage, then subsequent. Perhaps they will lead to de-escalation of the conflict. And it is possible that they (future stages) will not exist at all.
On January 15, it became known that the United States warned the British government about threats of cooperation with Huawei, citing its past experience.. The Americans even handed over a dossier to the UK, the contents of which, according to sources, called into question information security in the case of using the services of a Chinese company. Her Majesty’s counterintelligence does not yet think to refuse to supply Huawei equipment, although the United States is already threatening to stop the exchange of intelligence between countries. China has not yet responded to the US statement (at least openly).
In fact, such a situation in the Chinese economy threatens not only the Middle Kingdom and countries that are somehow involved in the confrontation between the two superpowers. Predicting China's economic situation for 2019, experts noted that Chinese leader Xi Jinping is in no hurry to make US concessions, and a new round of escalation of the trade war between the US and China is likely to inflict a devastating blow on Asian markets.
However, this is what happened.. The collapse of the Asian markets has already begun.
Despite the general indicators, the stock market of the Celestial Empire shows the worst dynamics since 2008. South Korea and Taiwan indices are not far behind him.. This year, China has shown that it can take even more radical steps so as not to yield to the United States.. In this case, we will get. If there will be a second wave of a trade war between economic giants, then small Ukraine needs to be prepared for a big financial tsunami.
Since we do not control the wave, we need to catch it in time.
Reprinted with permission of IA "