China's government is facing a multi-front battle to defend its economy, fighting to reduce its debt mountain while the yuan and local stock markets tumble in the face of a US trade conflict.
With the Trump administration preparing to roll out tariffs on some $34 billion of Chinese imports next week, the Shanghai Stock Exchange is taking a nosedive -- down some eight percent in the last two weeks before recovering on Friday.
The yuan has also come under pressure, falling to its lowest rate against the dollar since November 2017.
Louis Kuijs, head of Asia economics at Oxford Economics, said a trade war could slow China's economy by 0.3 percentage points on average over 2019-2020.
Read more ....
WNU Editor: The number one problem for the Chinese economy and Chinese provincial/municipal budgets is credit, and its addiction to U.S. trade surpluses to finance it. This has always been its Achilles Heel .... China’s economy faces deeper risks than trade war (Financial Times). But what makes me shake my head is that the Chinese have not only put themselves in a position where they expect trade surpluses with the U.S. to continue to increase over time, but that Americans would accept this arrangement even though every business model clearly shows it is not sustainable for the long term. Bottom line .... all good things come to an end, and for the Chinese this cash cow is coming to an end. My prediction is that the Chinese are going to look for other markets to export their problems, but these countries do not only lack the market size that can replace the U.S., but more importantly they have trade restrictions that are just as restrictive as the Chinese. In the end the Chinese economy is going to slow down .... and if it stalls .... Beijing is going to have a problem in meeting the needs of its population that has been raised with expectations of better times in the future.