© AP Photo / Manuel Balce CenetaПрезидент USA Donald trump at a reception dedicated to the 35th anniversary of the attack on a peace mission during the Lebanese civil war. 25 Oct 2018© AP Photo / Manuel Balce Ceneta
The US stock markets have resumed falling after the announcement of trump’s willingness to impose duties on all Chinese imports. Why American investors scares the warlike attitude of the White house and what opportunities a new round of Sino-us trade war opens for Russia at RIA Novosti.
«We will win»
Another attempt of the us stock market to recover after the collapse last week failed. This time — because of new threats trump against China.
In early trading the Dow Jones, S&P 500 and Nasdaq showed a positive trend. But the Bloomberg Washington’s intention to impose import duties on all Chinese goods dramatically changed the mood in the market. The index went down, and the stock exchanges closed in the red.
Investors not reassured even clarify that the duties will take effect only if the talks Donald trump with XI Jinping, which should take place on 30 November in Argentina at the meeting of «Big twenty» will be unsuccessful.
The problem is that the success of negotiations Washington involves only the unconditional implementation of the Beijing all U.S. requirements, including curtailment of the program of development of high technologies. That the Chinese would agree, investors don’t believe.
The more that trump is going to conduct negotiations only from a position of strength. In an interview with Fox News, the White house stated that «I win» in disputes with Beijing and conclude a profitable agreement.
«It happens, we will win,» promised the American President, adding that China is «draining» the American economy.
To eliminate a competitor
Almost simultaneously, the Ministry of Commerce announced a ban of products of the Chinese company Fujian Jinhua for reasons of national security.
«Fujian Jinhua is preparing to put into operation new production capacities for production of integrated circuits for dynamic random-access memories (DRAM),» — said the Doc.
According to officials, the Chinese are wiping out American manufacturers of similar devices. And those, among other things, suppliers of the defense industry.
«The inclusion of Jinhua in the black list will limit the ability to threaten the suppliers of components for our military systems,» — said the Minister of Commerce Wilbur Ross.
Experts believe that closing the American market to Fujian Jinhua, Doc protects from competition chipmaker Micron Technology Inc. However, Bloomberg indicates that Washington’s decision demonstrates how intends to continue to do with the Chinese companies supplying high-tech products.
Beijing did not remain in debt: in July, after the Chinese mobile operator China Mobile was forbidden to enter the American market, the court of Fuzhou city has imposed a temporary ban on sales of chips Micron Technology Inc. Now, it seems, from the temporary ban will become permanent and spread to all of China.
Last week the White house announced yet another impending attack on Beijing: a trump plans to withdraw from international agreements 1844 about rates for delivery of mail. This contract, which currently involves 192 countries, provides for the reduction of tariffs for international postal parcels.
In Washington sure that the agreement allows China to flood the American market with cheap goods, undermining the position of local producers.
Adviser to trump Peter Navarro, one of the main «hawks» in the current presidential administration, even wrote an article for the Financial Times about how the Chinese company via the Internet sellers such as Amazon or Alibaba, to sell to American consumers of fake and counterfeit products.
In this case, for the shipment of goods, the Chinese paid less than American providers in the country. According to his estimates, the cost of shipping parcels weighing half a kilogram from China to USA is about five dollars, while local companies have to pay «two to four times more» to send the same package from Los Angeles to new York.
The soft power of the yuan
According to the plan of the strategists in Washington, the ban on products from Fujian and the threat of increased tariffs on parcels from China will make XI Jinping more amenable at the summit in Argentina.
Meanwhile, Beijing has repeatedly stated that it will not negotiate «under the gun», and the hostile actions of Washington will always find an adequate response.
Now the Chinese are trying to neutralize the effect of U.S. duties due to the weakening of the national currency to the dollar. Thanks to exports becomes more profitable, and imports prohibitively expensive. As a result, despite the duty, the trade surplus hits record after record.
On Tuesday the people’s Bank of China has once again weakened the national currency. Now the dollar is worth 6.96 yuan so expensive it has not been since 2008.
Just since April, when Washington first imposed duties on Chinese goods, the yuan fell against the dollar almost 11%.
The worst, of course, there
Against this background, the chances of success of negotiations, Donald trump with XI Jinping close to zero that promises big problems for American firms.
Formed in the summer movement «Republicans against the tariffs,» interviewed representatives of more than two hundred companies on how a trade war will affect their business.
Among respondents, the flagships of the national industry, such as Caterpillar, Electrolux, Fiat-Crysler, Ford, General Electric, General Motors, and leading consumer brands, including producers of alcohol Jack Daniels and Jim Beam.
All complain about the loss of tens and hundreds of millions of dollars, all warned of an imminent reduction of production and jobs.
And this is an optimistic scenario. In the worst case, as the head of the world’s largest management company BlackRock Laurence Fink, the China because of the trade war will have to seek funds for large-scale economic stimulus and Beijing simply does not remain other choice, except for the massive sales of U.S. debt.
As of the end of July, China US government bonds was almost $ 1.2 trillion. Throwing these papers on the market, Beijing will condemn the American economy in an unprecedented financial crisis.
These prospects and causes investors to sell stocks ahead of a new round of trade war.
Experts note that while a trade war between China and the U.S. benefit third countries, in particular Russia.
Domestic companies have actively represent the Americans in the Chinese market of agricultural products and energy. A collapse of the U.S. stock market could encourage investors to redirect funds to the Russian market.
Estimated portfolio Manager of the investment Fund AllianceBernstein Morgan Harting, shares of companies in developing countries since the beginning of year has lost almost 20% of the cost, although the increase in profit for the period double-digit.
The expert predicts that this figure will remain strong next year. Thus, according to him, open up «huge opportunities» in the purchase of Russian stocks, in particular, LUKOIL, Tatneft and other oil and gas companies.