By: Azhar Azam
*This is one of my opinion pieces (unedited) that first appeared at "China Global Television Network (CGTN)":
https://news.cgtn.com/news/2019-10-30/Why-the-U-S-should-now-proceed-to-lift-tariffs-on-Chinese-goods-LcRjDr8lgY/index.html
Regardless of the scope and breadth, an affable and emboldened economic, trade, and political environment is crucial for any economy to thrive. Equally the tensed trade situation – such as China-US trade war – holds up the economic growth, shakes the investors’ confidence, threatens capital markets, and risks employments of either of them.
In a trade battle, it is meaningless to gauge the economic suffrage, declining investors; confidence, the scale to which stock markets were tanked, or the number of jobs lost. The bottom line is that all the contending economies and the people around the world are hurt.
Donald Trump has apparently fathomed the economic drawbacks and susceptibilities of the prolonging China-US trade war as the optimistic US president on Monday said that “phase -1” covenant with Beijing was “ahead of schedule”. He also looked very keen to sign “a very big portion” of the China deal quickly.
Chinese President Xi Jingping and the US President Donald Trump would sign “phase-1” deal focusing farmers and banking needs at the upcoming summit of Asia-Pacific Economic Cooperation (APEC) forum in Chili starting from November 11.
Trump’s remarks came after Chinese and the US officials stepped up the ladder to close parts of trade deal following high-level telephone talks on Friday. Response from the global stock markets was exceptional as they rallied to a 21-month high on Monday. Morgan Stanley Capital International (MSCI)’s All Country World Index soared 0.44% to its highest level since February 2, 2018.
The respite in China-US trade frictions boosted the US markets too. On Monday, S&P 500 Index cruised to set a new record, Nasdaq coasted to get closer to its lifetime high of late July, and Dow Jones Industrial Average threatened to break its previous best. Shares of some US-listed Chinese companies’ went up as well. Alibaba and Pinduoduo ascended 4.26% and 2.51% respectively to get through to top-10 gainers of the day.
Dow’s jump of almost superseding its prior best was momentous since the US treasury Department on August 5 touted China a “currency manipulator” after it dropped by 767 points.
But Dow’s latter surge of 4.5% and the recent wheel up established that the alleged yuan-related slump was transitory and Beijing had no role in disrupting US capital markets. Therefore, in order to transpire a constructive ad productive deal, US should prevent to unnecessarily accuse China for unfair trade practices and currency manipulation.
China-US trade truce is making a handful of downbeat effects in currency market as optimism over a trade agreement between Beijing and Washington eased the demand of the greenback (US dollar), which slipped 0.09% against a basket of six major currencies on the day.
With the recent dollar slid, the Trump administration could see the episode a healthier sign for the American economy as comparatively a stronger dollar could cart implications for US exports and corporate profits and could force the US manufacturers to relocate their plants in foreign countries, resulting in at lost jobs in the country at least for a short-term.
The growing hopes about soothing trade tensions between the two largest economies of the world exhilarated the investors’ confidence who now anticipate the US Federal Reserve to cut interest rate for the third time in 2019.
US farmers would be the biggest beneficiary of China-US partial trade deal. Soon after the phase-1 deal will be signed, American farmers may return to their pre-trade war exports to China. Trump also has much to gain from the deal since a large number of farmers are located in Trump’s political constituencies.
The trade deal would provide a great relief to the US soybean and other agricultural exports, which peaked to $29 billion in 2013 before dropping to only $9 billion last year. The deal would considerably slice US spending on “Market Facilitation Program” that was aimed to blunt the impact of trade war on US farmers and cost US tax payers $16 billion this year, on top of about $15 billion (total $31 billion) in 2018.
Announcing the preliminary trade deal with China on October 11, Trump said that Beijing will make sure some intellectual property protections and increase agricultural imports from the US. In return, the Trump suspended tariff hike on roughly $250 billion of Chinese goods scheduled for October 15 and would agree to import Chinese-made cooked poultry and catfish products.
Positive signals from the global and US agriculture, stock, and currency markets go on to describe the vivacious importance of Chinese and the US convivial trade relationship for their respective as well as for the global economic growth.
Since both the countries are firmly intertwined with each other on trade, the dynamic China-US fusion could spur a substantial progress for both of them and the entire world.
While a complete end of the trade war can easily put the US economy back on target for 3% to 4% growth and the global economy to bounce back towards 5% – Washington should now proceed from tariffs suspension to lifting tariffs on Chinese goods to give a strong impetus to its own and the global economic growth.
*This is one of my opinion pieces (unedited) that first appeared at "China Global Television Network (CGTN)":
https://news.cgtn.com/news/2019-10-30/Why-the-U-S-should-now-proceed-to-lift-tariffs-on-Chinese-goods-LcRjDr8lgY/index.html
Regardless of the scope and breadth, an affable and emboldened economic, trade, and political environment is crucial for any economy to thrive. Equally the tensed trade situation – such as China-US trade war – holds up the economic growth, shakes the investors’ confidence, threatens capital markets, and risks employments of either of them.
In a trade battle, it is meaningless to gauge the economic suffrage, declining investors; confidence, the scale to which stock markets were tanked, or the number of jobs lost. The bottom line is that all the contending economies and the people around the world are hurt.
Donald Trump has apparently fathomed the economic drawbacks and susceptibilities of the prolonging China-US trade war as the optimistic US president on Monday said that “phase -1” covenant with Beijing was “ahead of schedule”. He also looked very keen to sign “a very big portion” of the China deal quickly.
Chinese President Xi Jingping and the US President Donald Trump would sign “phase-1” deal focusing farmers and banking needs at the upcoming summit of Asia-Pacific Economic Cooperation (APEC) forum in Chili starting from November 11.
Trump’s remarks came after Chinese and the US officials stepped up the ladder to close parts of trade deal following high-level telephone talks on Friday. Response from the global stock markets was exceptional as they rallied to a 21-month high on Monday. Morgan Stanley Capital International (MSCI)’s All Country World Index soared 0.44% to its highest level since February 2, 2018.
The respite in China-US trade frictions boosted the US markets too. On Monday, S&P 500 Index cruised to set a new record, Nasdaq coasted to get closer to its lifetime high of late July, and Dow Jones Industrial Average threatened to break its previous best. Shares of some US-listed Chinese companies’ went up as well. Alibaba and Pinduoduo ascended 4.26% and 2.51% respectively to get through to top-10 gainers of the day.
Dow’s jump of almost superseding its prior best was momentous since the US treasury Department on August 5 touted China a “currency manipulator” after it dropped by 767 points.
But Dow’s latter surge of 4.5% and the recent wheel up established that the alleged yuan-related slump was transitory and Beijing had no role in disrupting US capital markets. Therefore, in order to transpire a constructive ad productive deal, US should prevent to unnecessarily accuse China for unfair trade practices and currency manipulation.
China-US trade truce is making a handful of downbeat effects in currency market as optimism over a trade agreement between Beijing and Washington eased the demand of the greenback (US dollar), which slipped 0.09% against a basket of six major currencies on the day.
With the recent dollar slid, the Trump administration could see the episode a healthier sign for the American economy as comparatively a stronger dollar could cart implications for US exports and corporate profits and could force the US manufacturers to relocate their plants in foreign countries, resulting in at lost jobs in the country at least for a short-term.
The growing hopes about soothing trade tensions between the two largest economies of the world exhilarated the investors’ confidence who now anticipate the US Federal Reserve to cut interest rate for the third time in 2019.
US farmers would be the biggest beneficiary of China-US partial trade deal. Soon after the phase-1 deal will be signed, American farmers may return to their pre-trade war exports to China. Trump also has much to gain from the deal since a large number of farmers are located in Trump’s political constituencies.
The trade deal would provide a great relief to the US soybean and other agricultural exports, which peaked to $29 billion in 2013 before dropping to only $9 billion last year. The deal would considerably slice US spending on “Market Facilitation Program” that was aimed to blunt the impact of trade war on US farmers and cost US tax payers $16 billion this year, on top of about $15 billion (total $31 billion) in 2018.
Announcing the preliminary trade deal with China on October 11, Trump said that Beijing will make sure some intellectual property protections and increase agricultural imports from the US. In return, the Trump suspended tariff hike on roughly $250 billion of Chinese goods scheduled for October 15 and would agree to import Chinese-made cooked poultry and catfish products.
Positive signals from the global and US agriculture, stock, and currency markets go on to describe the vivacious importance of Chinese and the US convivial trade relationship for their respective as well as for the global economic growth.
Since both the countries are firmly intertwined with each other on trade, the dynamic China-US fusion could spur a substantial progress for both of them and the entire world.
While a complete end of the trade war can easily put the US economy back on target for 3% to 4% growth and the global economy to bounce back towards 5% – Washington should now proceed from tariffs suspension to lifting tariffs on Chinese goods to give a strong impetus to its own and the global economic growth.