China threatens retaliation – talks continue

China threatens retaliation - talks continue

The u.S. And china want to talk despite the raging trade war between the world’s two largest economies. Talks on settling the bitter dispute are to continue this thursday in washington.

"China has just informed us that they (vice premier) are now coming to the u.S. To make a deal," u.S. President donald trump wrote on twitter.

Almost at the same time, however, the U.S. Department of the treasury sent a preliminary notice to the U.S. Federal register stating that the special tariffs will be raised from this friday onwards. Trump had previously announced this.

The chinese government threatened retaliatory tariffs. If the USA implements the planned tariff increases, china will take "necessary countermeasures", the ministry of commerce in beijing announced. But an escalating trade dispute is not in the interest of china or the world. China will "deeply regret" if U.S. Implements its planned tariff increases.

Trump wants to increase the already imposed punitive tariffs on imports from china with a value of 200 billion US dollars from this friday from 10 to 25 percent. He also threatens to soon extend the special duty to all imports from china, which have a total volume of more than 500 billion U.S. Dollars.

Trade war with the U.S. Caused china’s exports to fall surprisingly sharply in april. While trade with germany and europe rose, goods exchanged with the u.S. Plunged 15.7 percent. According to the customs in beijing, total exports in U.S. Dollars fell by 2.7 percent compared to the same month last year. The drop surprised experts, who had expected exports to grow in april after a sharp 14.2 percent rise in march.

But under the weight of the punitive tariff, chinese exports to the u.S. Fell 9.7 percent compared to the same month last year. The decline contributed to more than 80 percent of the total export weakness, according to the australian ANZ bank. Bad news for U.S. Exporters, too: china’s imports of U.S. Goods plunged by as much as 30.4 percent.

The two largest economies have been slapping each other with tariffs for months as negotiations to end the trade war drag on. On thursday and friday, both sides will meet in washington for a new round, the chinese delegation will be led by vice premier liu he. But hopes are sinking that an agreement can be reached soon, which is also causing great concern in the financial markets.

Experts also explained the decline in chinese exports to the u.S. With the fact that – after the brief recovery in march – a lull is setting in, because many exports to the u.S. Had been brought forward due to the threat of escalation in previous months.

In march, the trend was still positive for seasonal reasons, as an export backlog was worked off over the chinese new year in february, he said. By april, however, activity in the manufacturing sector had also begun to slow down.

Weak exports increase chinese leaders’ difficulty in boosting economy. "The chance of an early recovery is becoming less likely," ANZ analysts commented. The new uncertainties in the trade languages darkened the outlook for exports even in the second half of the year – also because many exports to the USA had already been brought forward at the end of 2018.

China’s economy grew at an unexpectedly stable rate of 6.4 percent in the first quarter, as tax cuts and other measures to stimulate the economy took effect. In the long run, however, these economic downturns undermine the necessary efforts to reduce the country’s high debt burden and correct structural distortions.

The only bright spot in april seemed to be imports, which were unexpectedly strong overall. However, the increase was mainly explained by the rise in prices and imports of raw materials such as coal, oil, gas and iron ore. Compared to the same month last year, imports increased by four percent, although a decline like that of the previous month had been expected. The overall trade surplus fell from 18.8 to 13.84 billion u.S. Dollars.

The decline in chinese exports to the US and overall contrasts with a 3.7 percent increase in exports to germany and a 5.9 percent increase in exports to the european union. Imports from germany, on the other hand, hardly changed at all, falling by 0.1 percent. Imports from the european union increased by 2.5 percent.

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