Weak spots emerge in China's economy as trade war intensifies


In series of early-morning tweets on Tuesday, Trump kept up his "America First" agenda in support of hefty tariffs and called on United States companies to back him by shifting their businesses away from China. If Trump follows through on his threat to slap 25 percent tariffs on an additional $325 billion of Chinese-made goods, that trend will accelerate.

"Make your product at home in the United States of America and there is no Tariff".

The competing job numbers explain why the debate over Trump's tariffs are full of confusing anecdotes - and why most anyone can find "good news" to support their favorite argument.

Over the last few years, China has moved away from being an export-driven economy to being a consumption-driven economy.

At first blush, this idea seems stupid: China sends us goods, we send China little slips of paper in response, and we're supposed to be the losers?

Big mistake. The U.S. economy is strong, unemployment is at the lowest level in five decades, and wages are rising.

The announcement comes as trade tensions between the economic superpowers are rising after the USA hiked tariffs on $200 billion of Chinese goods last week, to which Beijing retaliated. Getting China to stop subsidizing large sectors of its economy, and to cease its theft of US intellectual property, will be extremely hard.

Trump has said he would meet with Chinese President Xi Jinping during a G20 meeting at the end of June.

Beijing has rolled out huge tax-cuts and other measures this year to ramp up the economy and offset the impact of a trade war that has seen the USA impose tariffs on hundreds of billions of dollars worth of Chinese goods, causing worries for exporters. "No way!" Trump wrote.

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"The question is how do we deal with the fact that they steal intellectual property". As U.S. and Chinese negotiations met in Washington last week, Trump announced that he was raising tariffs from 10% to 25% on $200 billion worth of Chinese goods.

In the hearing on Wednesday, Mnuchin said the United States is close to resolving a dispute over steel and aluminum tariffs that were imposed on Canada and Mexico a year ago as the three countries renegotiated the North American Free Trade Agreement.

Calling on the United States to "carefully weigh its gains and losses, grasp the situation and get back on the right track as soon as possible", Geng urged the US side to meet China halfway in achieving a mutually beneficial and win-win agreement on the basis of mutual respect.

"Our great Patriot Farmers will be one of the biggest beneficiaries of what is happening now".

The president does acknowledge that China's retaliatory tariffs have hurt American farmers, and he promises to help them, using revenue generated by his own tariffs, which amounts to a transfer from one set of victims to another.

Data out of the United States showed US retail sales fell last month as households cut back on purchases of motor vehicles and other goods, pointing to a slowdown in economic growth after a boost from exports and inventories in the first quarter. "In addition, US manufacturers who compete with China can raise prices, too". But China is not a fully free-market economy, so I guess asking China to do this is less ridiculous than if we asked, say, France.

Since then, the sides have exchanged several rounds of trade duties.

The U.S. Department of Agriculture has paid $8.52 billion directly to farmers as part of a 2018 aid program created to offset losses from tariffs imposed by China and other trading partners, a spokesman for the agency said on Wednesday.

Morgan Stanley told clients that the new tariffs are likely to create headwinds for corporate earnings and the economy could fall into a recession if the country's trade war keeps escalating.