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Main » 2018 » July » 23 » Four of China's trump card, which can help to win the trade war with the United States
Four of China's trump card, which can help to win the trade war with the United States


US did not calm down and trade conflicts between the major economies of the world is only compounded by the step-by-step relationship is increasingly deteriorate. Thus, the United States published a list of tariffs that they could enter on Chinese goods worth $ 200 billion. 

At the end of the week Trump said he was ready to introduce duties on $ 500 billion of imports from China.






China is yet consistent with the United States dollar for dollar rates, and introduced a fee only $ 34 billion, but it seems this is not enough, and China needs to act more radically, and to use the available benefits.


1. Stop buying US Treasuries

It is China - the leading holder of US Treasury bonds, which are available to almost $ 1 trillion of bonds a year earlier. US bonds have always been considered a reliable investment tool, but as the situation escalated, China can not just stop buying them, but also to start selling existing ones. 

This can have a significant impact on the US economy. Provided that China will start to sell US Treasury bonds, the bond yields may rise as all other participants of this market will understand that the cost of the bond will fall off. 

Recall, the higher yield makes it more costly for Washington's borrowing through auctions of new debt, but the company issuing corporate debt, will also bear the higher costs of borrowing.

2. Devaluation of the national currency of China

As you can see, the yuan has dropped significantly, and the state government does not attempt to support him. Probably, this is done to "annoy" the president of Trump and make controversial tariffs, as the currency fell. 

Provided that the yuan will fall by about 8% that has already occurred, the US importers will see only 2% for Chinese goods prices. 

This can be explained simply enough - if Chinese goods purchase price drops, any fees added to the price, lead to the fact that the total cost of this product is equal to where it is today.

3. To complicate "life" of US companies

Chinese authorities have a significant impact on their people. If desired by the government, the people of the state will simply stop not only to buy goods from the United States, but even to visit this country. Already have such a practice. 

For example, when South Korea has agreed to place on its territory missile defense system, then residents abandoned their automotive products. 

A similar situation occurred with Hong Kong, when residents began to protest against greater independence from China, tourist destination immediately stopped. 

It is worth noting that from China was not the government's ban on the purchase of cars or visit the country - it was only the decision of the citizens.

In addition, the current situation may also make it harder for US companies out of China, namely the transfer of funds will require the approval, which can significantly increase the time to carry out such an operation. 

China also can make it harder for Americans to obtain visas.

4. Isolate the US

Against the background of US isolation from other countries, China may on the contrary, to receive all the benefits lost by the United States. 

Earlier, the US left the Trans-Pacific Partnership area, allowing China to easily take their place, and acquire the ability to have more open trade with 11 countries. 

At the moment, China is already in the trade negotiations with Canada and the EU. Probably tariffs between China and a number of countries will be reduced or eliminated, which will provide an opportunity to simplify the process of moving goods from one place to another after the conclusion of trade deals.


Based on materials WELTRADE




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