The conflict between the US and China will probably escalate and cover more fields. Recently it has also covered currency issues. All this can contribute to the slowdown of the global economy, including the EU economy.
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Importantly: we are already noticing that China is again working to strengthen the yuan, e.g. by announcing the sale of bonds denominated in it. In this context, the earlier weakening of the Chinese currency can be seen as a demonstration by the PRC against the United States that it is one of the instruments that can be used in the ongoing trade war and it can be a way of hitting the US economy.
Calculations by financial institutions show that due to declines in the New York Stock Exchange, caused by the recent exchange of blows, investors have recorded over $ 700 billion. losses This is a strong blow to the financial market, the more that Donald Trump likes to boast that during his tenure the stock exchange is doing very well, just like the entire American economy. Today in News paper china united states news.
When it comes to short-term effects – China’s exports may be more competitive in price. Buyers using the international settlement of the dollar will be able to purchase more goods or services for the yuan, thus importers from the US will not feel the tariff so china us trade news severely.
On the other hand, it is a double-edged sword, because the cheaper yuan can also have negative effects on the Chinese economy. Imported goods will be more expensive. Many Chinese companies use external components, for which they pay in dollars. It is similar to oil… The weakening of the yuan increases their costs, which can affect business results. In some industries in the Chinese economy, enterprises are heavily indebted in foreign currency, mainly in dollars. Debt servicing with weakening yuan will be more expensive.