US and China trade war tensions rise but signs are dialogue may be coming

The US and China are rattling their sabres in the trade war between the world's two biggest economies, with US president Donald Trump warning he can do much more to harm China than he has already done and Beijing urging Washington against setting the two countries on a collision course.  As the trade war caused turmoil on the world's capital markets, behind the heated comments, there were signs that dialogue is bearing fruit, with reports that Mr Trump and president Xi Jinping could meet at the G20 summit in Argentina in late November to discuss their differences In news that will certainly not have gone down well in Washington, Chinese export data for October showed a record trade surplus with the US, with importers buying extra ahead of the tariffs, while Washington announced that it was tightening controls on China's imports of civil nuclear technology to prevent use for military or other unauthorised purposes.

Exports

China’s economy is heavily dependent on exports, despite efforts to make Chinese consumers spend more and lift the domestic economy to counteract the effect of the trade war. Forecasting the export data was complicated because analysts expected companies to rush to get shipments in ahead of the extra tariffs of 10 per cent on $200 billion (€170 billion) of Chinese products. This is due to increase to 25 per cent by the end of the year. In response, China has levied around $60 billion (€51 billion) worth of tariffs on American goods, and both sides have already levied taxes of around $50 billion (€42.5 billion) of each other’s goods. When the data came out it was much stronger than expected.  Chinese exports in US dollar terms rose 14.5 per cent in September compared to the same period last year, China’s customs administration said. The forecast had been for a slowdown to 8.2 per cent. Imports climbed 14.3 per cent, leaving a trade surplus of $32 billion. Speaking to Fox News, Mr Trump said tariffs had been making inroads into the Chinese economy.

Relationship

”Their economy has gone down very substantially and I have a lot more to do if I want to do it,” he said. “I don’t want to do it, but they have to come to the table . . . they lived too well for too long and, frankly, I guess they think the Americans are stupid people. Americans are not stupid people. We were led badly when it came to trade,” Mr Trump told Fox & Friends.

This language was jumped on by the Chinese state news agency Xinhua when it said Sino-US relations were at a crossroads. "The recent string of relentless and groundless China-bashing rhetoric from US leaders has revealed a Washington bent on dragging Beijing into a full-scale face-off," it said in an editorial. "The world is worried. Given the profound significance of their relationship, what is at stake goes far beyond China and the United States. For the sake of the seven billion people living on the planet, theirs included, the two countries now have to take on their responsibility and make some responsible decisions," Xinhua said.