China-U.S. Trade War: Global Economic Impact and China’s Countermeasures
China is discussing stepping up stimulus measures to counter US tariff cuts. According to a Bloomberg report on April 7, Beijing is preparing to protect its economy from global trade tensions. These measures also include considering subsidies for select goods.
Trade Tensions and Tariff Escalations
The trade tussle between China and the US is increasing, threatening to disrupt the global economy in the coming times. The new tariffs imposed by US President Donald Trump on Chinese products have intensified the situation.
The Chinese Communist Party’s spokesperson newspaper, ‘People’s Daily’, said in an editorial, “Even though this tariff abuse by the US will have some impact on us, we should take it as new inspiration.” This implies that China is full of confidence and will try to turn the effects of these tariffs into inspiration.
Market Impact
The Hang Seng China Enterprises Index, which tracks Chinese stocks in Hong Kong, has fallen 10.8%, marking the worst day since the 2008 global financial crisis. Additionally, China’s 10-year government bond yield fell 8 basis points to 1.63%.
Global Economic Concerns
Tariffs have a profound impact on business, posing threats to the global economy. In response to the US President’s new tariffs, China announced an additional 34% levy on US goods, further fueling fears of a global trade war.
This ongoing trade conflict has affected global oil markets as well. For instance, oil prices fell by 7% on Friday, with Brent dropping by 10.9% and WTI by 10.6% last week.
Potential Recession Fears
Market experts indicate that the prospect of a trade war is creating recession fears among investors. Uncertainty in the market often leads investors to shift funds to safer options, causing declines in stock markets.
China’s Response and Potential Global Effects
Beijing has indicated it will continue taking “resolved measures” to safeguard its sovereignty, security, and interests, according to state news agency Xinhua. China’s government isn’t taking the situation lightly and hints at possibly more stringent measures if necessary.
This trade conflict could have far-reaching global consequences. Deteriorated trade relations between China and the US could affect economies like India and Europe, impacting their businesses and slowing down economic growth.
Efforts to Mitigate Impact
Amid this trade conflict, the Chinese government aims to minimize the impact on its market and companies. China is considering financial support and subsidies for various industries and businesses to maintain competitiveness despite US tariffs.
Despite these efforts, quickly resolving the trade conflict will benefit both nations and the world. Reduced tension will lead to fewer trade disruptions and economic stability.