An escalating trade war between the US and China will never bring the Asian economic power to its knees, but will rather make it stronger, says Chinese media; while economists warn of yet another US recession on the horizon.
Chinese newspaper, People’s Daily, wrote in a front page commentary on Friday that China is as “firm as a boulder” in protecting its national interests and dignity in the face of Washington’s trade war.
Last week, the administration of US President Donald Trump raised tariffs on $200 billion of Chinese imports from 10 percent to 25, as the two sides appeared to be close to ending months of trade dispute after returning to the negotiating table in Washington a day earlier.
Washington’s move, however, escalated the dispute with Beijing, which for its part, announced tariffs on $60 billion in US exports.
“The trade war can’t bring China down. It will only harden us to grow stronger,” said the daily.
It explained that the country’s confidence comes from the spirit of its people’s perseverance and endless struggle.
China’s state planner, National Development and Reform Commission (NDRC), also said on Friday that the friction with the US is “controllable.”
It said that the dispute had some impact on China’s economy, but it was “controllable” and countermeasures would be rolled-out when needed to “keep economic operations within reasonable range.”
Trump initiated what is effectively a trade war with China last year, when he first imposed unusually heavy tariffs on imports from the country. Since then, the two sides have exchanged tariffs on more than $360 billion in two-way trade.
In yet another open hostile act, Trump escalated the fight against Chinese telecommunication firm, Huawei, when he signed an executive order on Wednesday, banning the firm from using the US market.
Huawei's Hisilicon says it has long been preparing for U.S. ban scenario reuters.com/article/us-usa…
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Huawei Technologies Co Ltd denounced the move as “unreasonable,” saying the restrictions” will not make the US safer, nor will it make the US stronger. It will only force the US to use inferior and expensive alternative equipment, lagging behind other countries… and ultimately harming US companies and consumers.
Despite the announcement of higher tariffs and Washington’s move against Huawei, negotiations between Beijing and Washington haven't been totally abandoned.
Trump announced earlier this week that he will meet face-to-face with Chinese President Xi Jinping at the G20 summit late next month.
He even predicted that his meeting with Xi will likely be "very fruitful.” He dismissed ongoing trade war with China as a “little squabble.”
US recession risk rises amid heightened trade tensions
In the meantime, a majority of economists surveyed by Reuters suggested that the trade war has increased the risk of another economic recession in the US.
The economists put the chances of the recession happening in the next two years at 40 percent.
While only a single-digit percentage of respondents say a U.S. recession is likely in the coming year, more than one-quarter of economists polled see a greater than 50 percent probability of recession within two years.
“I have a hard time thinking of a scenario in which a further escalation of the trade tension we currently have would not make recession risk higher,” said Michael Hanson, head of global macro strategy at TD Securities.
The US economy is forecast to have already lost considerable momentum, slowing to 2.0 percent in the current quarter from 3.2 percent in the first three months of the year, according to median forecasts from the latest monthly poll of 120 economists.
The US — a very consumer-reliant economy—imports hundreds of billions of dollars worth of goods from China, on which Washington has imposed tariffs.
Many Americans complain of lost export markets, disrupted supply chains and higher costs.
This is while, China is trying to steer its economy away from exporting cheap goods and more toward domestic consumption.
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