The assignment of the trade: how China is trying to protect the world economy from recession

The assignment of the trade: how China is trying to protect the world economy from necessitada link
10 September 2019, 18:34

Vladimir Agoev
The stock markets of the USA and Asia show a significant increase after a relative weakening of the us-China trade war. Tariff conflict between the two countries increasingly makes experts to talk about the imminent start of the global recession. Meanwhile, the United States and China agreed to continue negotiations and thereby encouraged investors. Beijing agreed to buy American agricultural products in exchange for the cancellation of restrictions with Huawei. According to the analysts, China is deliberately going to make concessions, trying not only to protect yourself from the new sanctions, but also to reduce the risks of global recession.

  • © Xie Zhengyi/

The global stock market began to recover after falling sharply in August. Since the beginning of September in the US Dow Jones industrial average rose 1.7% (up to 256 835 items) corporate index S&P 500 by 1.7% (to 2978 points), and high-tech NASDAQ — on 1,5% (up to 8087 points). This is the highest indicator values for more than a month.

Similar dynamics of the show and trading platform Asia. The Shanghai stock exchange index SSE Composite has increased by 4.6% (to 3021 points), Hong Kong’s Hang Seng — by 3.7% (to 26 683 points), and the Japanese Nikkei — 3.3% (21 392 points). The last time similar levels indexes can be observed at the end of July.

The growth of quotations RT interviewed experts associated with the weakening of the trade war between the US and China. Although in August the two countries ‘ relations deteriorated, Donald trump still hopes to hold consultations with representatives of the PRC until the end of September. About this American leader said earlier at a meeting with journalists in the White house, reports TASS. At the same time, the Ministry of Commerce of China formally announced the implementation of new trade negotiations with the United States in early October.


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«The situation is developing favorably, and trade negotiations should be resumed. Markets were evaluated by repeated reports of trump on the progress in discussion with Beijing. Thus, when the Chinese themselves have declared readiness for dialogue with Washington, it only strengthened the confidence of investors. The indexes rebounded from the minimum values of August and began to move toward historic highs,» — said in an interview with RT’s senior analyst QBF Oleg Bogdanov.

We will remind, the tariff struggle between the two largest economies in the world began in 2018. Washington has accused Beijing of illegally obtaining U.S. technology and intellectual property. According to the White house, China’s actions have led to the fact that the US trade deficit with the Asian Republic reached $375 billion.

In the first stage of the trade war the United States began to impose duties on imported Chinese goods at $250 billion. In response, Beijing has established tariffs on the importation of American goods by $60 billion.

In early 2019 the parties back to the negotiating table, but in may, Washington went on the intensification of the conflict. So, the US increased duties on goods from China ($200 billion), and China imposed new restrictions in the volume of $60 billion at the same time, American technology companies have begun to cease cooperation with the Chinese giant Huawei.

Another round of conflict occurred in August and sparked panic in world markets. Countries failed to agree on the terms of a commercial transaction and reiterated the introduction of mutual tariffs. The restrictions became effective on September 1, and in full force and effect measures will be effective December 15.

According to the charges of trump, China is not fulfilling the agreements and is trying to delay signing the deal until the US presidential election in 2020. However, according to Oleg Bogdanov, this wait and see attitude may lead to a new strengthening of a trade war.

«China is trying to buy time before the elections in the United States. Beijing is counting on the fact that the power in the States will change — and the pressure on Beijing will be reduced. However, while that Donald trump is popular with voters, so the chances of winning he has. Moreover, the acting President informed himself said that if he wins in 2020, and the contract with China is signed, against Beijing will introduce new restrictions,» — said Bogdanov.

Chain reaction

September 9, the international rating Agency Fitch has lowered the forecast on growth of economy of China in 2019 from 6.2% to 6.1%, and in 2020 — from 6% to 5.7%. The evaluation in the organization associated with the protracted trade conflict between Beijing and Washington. Moreover, according to analysts Fitch, the slowdown in China threatens the global economy as a whole.

«The slowdown in China increasingly affects the global economy. This factor became one of the main reasons for disappointing growth in the Eurozone economies», the review says Fitch.


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Besides the negative impact on European markets, the worsening economic situation in China and continued trade war negatively affect the United States. About this in an interview with RT told the chief strategist of «UNIVER Capital» Dmitry Alexandrov. According to him, it was too hard us duty deprive entrepreneurs of income and the largest market.

«During the July negotiations one of the main conditions was that China had to begin the purchase of agricultural products from the United States. Then the meeting was disrupted, and this has resulted in a number of negative consequences for the global economy: the rapid depreciation of the yuan by 7% in one week, the decline of oil prices to below $ $57 dollars per barrel and weakening of currencies of developing countries,» the expert added.

The result of the tariff conflict, today most of the financial Directors of leading companies in the world are predicting a General economic downturn in 2020. This is evidenced by the results of a recent study «Perspectives of global business» the American Duke University.

According to the analysis, in the USA 48,1% of respondents predict the economic downturn in the country in the second quarter of next year, and 69% are definitely talking about the onset of the recession by the end of 2020. At the same time in Africa, 85% of financial Directors expect the decline in the region’s economy in the second quarter of 2020, in Europe, 63% in Asia, 57% in Latin America — 52%.

«For the first time in a decade, no region of the world was not in a sufficiently strong economic position to become the driving force of the world economy», — said the Professor of Finance at Duke University and head of research John Graham.

According to Oleg Bogdanov, even in the current situation the US is not going to remove duties on China and thereby only increase the pressure on Asian Republic and the world economy as a whole. Against this background, China is prepared to make certain concessions in a trade dispute.

Thus, according to the newspaper Politico, Beijing is ready to buy from US a small number of agricultural products in exchange for the easing of restrictions for Huawei. According to experts, thus China seeks not only to protect themselves from the impact of the us duties, but also to delay the possible onset of the global crisis.

«China’s decision on the purchase of small quantities of agricultural products shows that the Asian country is ready to the October negotiations. The results of the meeting can make terms of trade more favorable to both countries and to reduce the risk of global recession», — concluded Dmitry Alexandrov.

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