U.S. trade action bites Chinese economy, trade negotiations scheduled for Jan 7-8

The United States and China have until March to resolve the core issues of the trade war. If Beijing were to continue stonewalling U.S. demands of bringing an end to the abuse of its intellectual property, opening up its market and take measures to address the trade imbalance, Washington is likely to impose stronger trade measures as it strives to redress China’s economic abuses.

On January 7 & 8, the United States and China are scheduled to hold vice ministerial level trade talks to ease the trade war, which has roiled global financial markets. For much of 2018, both countries have been locked in a trade war which stoked fears of a global economic slowdown.

Jeffrey Gerrish, Washington’s Deputy U.S. Trade Representative is scheduled to visit China to have a “positive and constructive discussions” with his counterparts, according to a statement put up by China’s ministry of Commerce on its website.

During such a summit in 2018 in Argentina, Chinese President Xi Jinping agreed to a ceasefire with U.S. President Donald Trump. The Chinese economy is beginning to feel the effect of the U.S. trade action.

Following the truce, China and the U.S. face a key deadline in March 2019, by which time the dispute has to be resolved, failing which Trump will proceed with stronger hikes in U.S. trade measure. Beijing has little scope for maneuvering given its trade surplus with the U.S., its rising debt pile and slowing economy.

Although Trump has indicated that negotiations are progressing well, it is unclear whether belligerent Beijing will yield to key U.S. demands over trade imbalances, which includes corrections to its abuses of U.S. intellectual property, and the opening of its market.

According to economy data gathered this week, there is a marked loss of momentum in the economies of the United States and China at the end of 2018.

While U.S. manufacturing activity slowed more than it was expected in December, according to the Institute for Supply Management (ISM), for the first time in two years, Chinese manufacturing activity contracted significantly.

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