G-20 Summit and trade dispute between Washington and Beijing

G-20 Summit and trade dispute between Washington and Beijing

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Trade dispute between China and the United States  since the first Trump days at the White House has heated up. Trump accused China during his election campaign of unfair trade practices and theft of intellectual property . He threatened to impose tariffs on Chinese exports, saying China’s entry into the World Trade Organization opened the way for “the biggest theft of jobs in history” .Trump also wants to reduce the trade deficit with China, as he thinks it affects the US manufacturing.
As if the declared reason for this sudden US shift was what has been mentioned by the president and other officials that China was retreating from commitments it had previously made during the negotiations, impeding agreement and prolonging the negotiation period without real justification other than China’s dodging. This prompted Washington to use the last card and raise tariffs on Chinese exports, which were supposed to have been implemented earlier this year, had it not been for the United States to freeze its decision with the agreement between the Chinese and US presidents at the beginning of December to begin negotiations to resolve their trade disputes.

It was expected according to US sources to reach an agreement by the end of last month, but the situation turned upside down with the imposition of the US President a higher customs duties beginning on the current May 10, which caused great confusion in economic conditions in four parts of the globe, These disruptions or instability were the following:
First, the large decline in the global stock market indices in Europe, America, China, Japan and other countries. The escalation of the trade war reinforced the pessimism that the growth rate of the world economy will see a remarkable decline this year. The International Monetary Fund issued its expectations in April of global growth, down to 3.3% after earlier forecasting a 3.5% growth rate. Of course, the return of trade disputes and the escalation of mutual threats are reducing trade and destabilizing commodity supply chains that many countries around the world are contributing to, whether from advanced or developing countries, low level of growth means, of course, the low level of production companies and then the level of revenue and profits, leading to weak demand for stocks and the decline in global capital markets indicators.
Second, with pessimism about global economic growth, of course, there is an increasing likelihood of the decline in demand for some commodities, especially oil, which caused an immediate drop in the price of Brent crude oil by more than 2% last Tuesday, as well as what has been mentioned by US Energy Information Administration (EIA) The United States that it expected to increase US production during the current year to about 12.4 million barrels per day on average, which exceeds previous expectations, and contributes to the increase in supply, and what has strengthened the tendency towards lower prices also that the US Energy Information Administration expected the decline in the rate of growth of global demand for oil in the current year to about 1.38 million barrels per day, after the rates of the past few years exceed 1.6 million barrels per day, not to mention that these estimates exceed other estimates such as OPEC estimates, which sets the growth rate of global demand this year at about 1.2 million barrels per day.

Although oil prices rose relatively the next day, this was due to fear of a supply shortfall as US sanctions against Iran and Venezuela were tightened, and US commercial inventories of crude oil unexpectedly fell by about 4 million barrels in the week ending May 2 . However, the threats posed by the escalation of the trade war remain a sword on the neck of oil prices or, at the very least, a counterbalance to the fear of a lack of supply, prevailed on markets .
Thirdly, the rise in gold prices and Japanese yen exchange rates was also notable, with increased demand for them as safe assets or safe havens in times of uncertainty and instability in the global economy.
The trade war between the United States and China has escalated in recent days, with both countries announcing new tariffs on other goods. US President Donald Trump has repeatedly said China would pay those taxes even after his economic adviser, Larry Kodlo, admitted Sunday that US companies would pay customs duties on any goods imported from China. Was Trump wrong to say that the trade war In the interest of the United States and it will bring billions of dollars to the US Treasury? Some of the world’s largest shoe makers have urged US President Donald Trump to end the trade war with China, and companies warned of its disastrous effects on consumers. Some 173 companies, including Nike and Adidas, have signed a letter saying Trump’s decision to raise taxes and tariffs on his country’s imports from China would affect the working class. It warned that these new fees also threaten the future of a number of companies.
The trade crisis between Washington and Beijing is dominated by the G-20 summit as the G-20 major economic states expressed concern that the global economy is still facing negative risks amid a continuing trade dispute between China and the United States where the countries began a two-day meeting in southwestern Japan . Japanese Finance Minister Taro Aso told reporters after the first day of the meeting in Fukuoka that they agreed that “the world economy will be strengthened in the latter half of this year.” Aso , who presided the meeting , added “The market confidence will be affected if the trade dispute between the China and America is not resolved, . ”
Central bankers and other financial regulators who met in the southern Japanese coastal city pointed to the dangers of the Beijing-Washington collision over trade and technology at the global economic level. Treasury Secretary Stephen Manuchein said Washington did not mind negotiations with China but warned that his country would continue to pressure it through customs duties if no deal is reached. He underestimated the concerns of other financial leaders who attended the meetings on President Donald Trump’s moves toward major Chinese companies led by giant Technology Industries, Huawei. . Trump announced Thursday, He will decide whether he will implement his threat to impose strict tariffs on all imports from China worth $ 325 billion after the G20 summit. The US president and his administration have argued that the tariffs imposed by Washington on Chinese exports over the past year create new business opportunities for companies in the United States and a number of other States.
Huo Chi Jin , editor –in-chief of the communist Party of China (CPC) Newspaper, said on Twitter, “China is adopting a management mechanism to protect its core technologies.” He added “This is a major step to improving its system and a step to confront the US campaign, once implemented some technology exports to the United States will be under control.”

“There are growing concerns about the impact of rising trade tensions,” IMF Managing Director Christine Lagarde said Wednesday in a statement” . she added “The danger is that recent US and Chinese tariffs could lead to a decline in investment, productivity and growth.” The IMF director warned that tariffs, including those imposed earlier, would cut global economic growth by 0.5 percent in 2020 or about 455 billion dollars, “a larger proportion from the economy of South Africa.”

She pointed out, “These wounds are deliberate self-harm and must be avoided. How to do? By eliminating recent tariff barriers imposed lately and avoiding new barriers in any way. “The G20 economies are expected to pledge to enhance their efforts to collect taxes more effectively than major technology companies such as Facebook and Google, Kyodo said, citing a draft of joint statement of its meetings Scheduled in Fukuoka City.
International trade observers believe that if the trade dispute between Washington and Beijing continues to be a threat to the conflict between the two countries, the trade war could lead to a major economic crisis threatening the world, and the consequences of it would be catastrophic given the great interdependence of the global economy at present time. They pointed out that the two countries have the right to protect their economies, but they must take into account the damage that this war may cause to the countries of the world, especially the small economies, and must work to reach a consensus that satisfies all parties.
Mohammed Zakeria , an Egyptian economic expert said, “The trade talks between China and the United States will determine the features of the next economic war”. He added, United States is trying to stop China’s dumping operations around the world and that the lifting of customs duties on Chinese imports will have a major impact on the two sides, only the United States will be the biggest loss.

He explained that China’s currency is firmly present in banks, which makes it compete strongly with the United States in the economic balance, which is feared by America and trying to disable it in any way to ensure its leadership in the world, but China’s exports to the United States is not made by Washington at home, the matter that would create an internal crisis. Everyone is betting that in such situations the wisdom will lead the major world’s two economies to understanding, for their common benefit and for the benefit of the rest of the world.

Economic Studies Unit
Rawabet Center for Research and Strategic Studies