{"id":36061,"date":"2018-07-20T06:14:58","date_gmt":"2018-07-20T11:14:58","guid":{"rendered":"http:\/\/olduvai.ca\/?p=36061"},"modified":"2018-07-20T06:14:58","modified_gmt":"2018-07-20T11:14:58","slug":"trumps-trade-war-may-spark-a-chinese-debt-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=36061","title":{"rendered":"Trump\u2019s Trade War May Spark a Chinese Debt Crisis"},"content":{"rendered":"
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Trump\u2019s Trade War May Spark a Chinese Debt Crisis<\/a><\/h3>\n<\/div>\n<\/div>\n
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(Bloomberg Opinion) — There\u2019s\u00a0no chance China will cut its trade surplus with the U.S. in response to President Donald Trump\u2019s tariff threats. For starters, Washington has made no specific demand to which Beijing can respond. But its efforts may have an unexpected side effect: a\u00a0debt crisis in China.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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The 25 percent\u00a0additional tariffs on exports of machinery and electronics looked, at first blush, like a stealth\u00a0tax on offshoring. The focus on categories like semiconductors and nuclear components, in which U.S.-owned manufacturers in China are strong, recalled Trump\u2019s 2016 promise to tax \u201ca<\/a>ny business that leaves our country<\/a>.\u201d<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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It seems, though, that offshoring wasn\u2019t the target after all. Now, with the imposition of new tariffs on low-value exports <\/a>that mostly involve Asian value chains, the simple fact of selling cheap products that the U.S. buys has become the problem.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Either way, the administration appears set on shrinking its current-account deficit (which, at a moderate 2.4 percent\u00a0of GDP, is far lower than the 6 percent clocked in 2006-7) just as the Federal Reserve raises interest rates. Distress has already been registered <\/a>in China. On July 13, the yuan (also known as the renminbi) hit 6.725 to the dollar, the weakest in a year and 5 percent lower than at the end of May.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Such a move is nothing earth-shaking for less controlled currencies. But a stable renminbi is a key plank in the leadership\u2019s promise to its people, and the exchange rate is tightly managed by the central bank.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Chinese investors have been buying official assurances for a year that the renminbi would be a fortress, but now they\u2019re not so sure and are exporting\u00a0money again: May saw net capital outflows and a decline in the foreign-exchange reserves<\/a>.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Trump\u2019s Trade War May Spark a Chinese Debt Crisis (Bloomberg Opinion) — There\u2019s\u00a0no chance China will cut its trade surplus with the U.S. in response to President Donald Trump\u2019s tariff threats. For starters, Washington has made no specific demand to which Beijing can respond. But its efforts may have an unexpected side effect: a\u00a0debt crisis […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,5],"tags":[15751,83,130,2160,195,4106,7844,675,805,3222,827,839],"class_list":["post-36061","post","type-post","status-publish","format-standard","hentry","category-economics","category-geopolitics","tag-anne-stevenson-yang","tag-bloomberg","tag-china","tag-chinese-yuan","tag-debt","tag-debt-crisis","tag-donald-trump","tag-renminbi","tag-trade","tag-trade-war","tag-united-states","tag-us-dollar"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/36061","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=36061"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/36061\/revisions"}],"predecessor-version":[{"id":36062,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/36061\/revisions\/36062"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=36061"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=36061"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=36061"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}