Asian stocks lower on US-China trade worries

Larry Hoffman
September 26, 2018

The U.S. and China implemented another round of tariffs on billions of dollars' worth of one another's goods on Monday, which has the potential to raise U.S. prices on some common consumer items.

"These practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy", he said in announcing the tariffs last week. In response, China retaliated, slapping tariffs on $US60 billion worth of U.S. goods entering the country.

The Communist Party's People's Daily said in a commentary that cooperation was the only correct option in resolving the trade conflict, noting that bilateral trade amounted to US$583.7 billion past year, 233 times higher than in 1979, when both countries established diplomatic ties.

Still, China has other methods of retaliation open to it.

Over the past few months, Chinese state media have started to portray Trump and the trade hawks in his administration as harbouring ulterior motives to use trade and investment restrictions as excuses to stymie China's progress and derail its efforts to become a world power capable of challenging the global supremacy of the US.

China has responded to the US' tariff measures by seeking the common interests of not just both parties but also the global trade order, and has answered the US' concerns with the "greatest level of patience and good faith".

Beijing's retaliatory tariffs on US$60 billion of United States goods were set to go into effect soon after the U.S. action, the Chinese Ministry of Finance said last week.

"With generic polls favoring the Democrats, they may feel that the trade environment may be less hostile after November 6", said ING's chief Asia economist, Rob Carnell.

Image Signs featuring U.S. and Chinese flags are seen outside a store selling foreign goods in Qingdao China
Signs featuring U.S. and Chinese flags are seen outside a store selling foreign goods in Qingdao

The remark follows a string of inflammatory remarks from Chinese policymakers following the introduction of new tariffs on Chinese imports from the United States on Monday.

China's state media has portrayed the trade war as a USA effort to constrict China's economic and technological rise. The new tariffs came into force on Monday with Washington pledging to raise the tax to 25 percent at the end of the year.

High-ranking officials from several Chinese government agencies held a press conference on Tuesday as Beijing rolled out a new white paper claiming to set the record straight on trade related facts.

"China and the U.S. have held four rounds of high-level talks". The price rise is notably caused by a recent drop in Iran's supply because of US sanctions.

U.S. officials have used such propaganda to put more pressure on China, and this pressure has made many Chinese people more clear-headed about the country's own pitfalls and the folly of over-the-top propaganda.

Vacuum cleaners, of which more than $1.8 billion worth were imported into the US last year, as well as light bulbs, could also take a hit.

Business groups say American companies also report Chinese regulators are starting to disrupt their operations through slower customs clearance and more environmental and other inspections.

The EU also retaliated by imposing 25 to 50 percent taxes on more than $3 billion of United States goods, including blue jeans, Harley-Davidson motorcycles, peanut butter, orange juice, rice and corn.

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