Summary: Be prepared for the worst situation of the Sino -US trade war

A week review

The Sino -US trade war is rumbling this week. You come and go, the two sides will continue to heat up.

The tariffs of US $ 200 billion in China exported to the United States raised from 10%to 25%. On Monday (13th), it was announced that the official launch of a 25%tariff of US $ 325 billion (S $ 446.9 billion) in China ’s export and American productsAfter the procedure, the White House launched a two -pronged attack on China: it is forbidden to sell the products that threaten national security to sell the products to the United States, and distribute Huawei and 68 companies in more than 20 countries to the entity list (blacklist)It means that American companies will need to obtain special licenses to sell necessary components from Huawei.

Nuclear bomb -level trick

Huawei has said that about one -third of the budget, that is, about $ 11 billion per year, allocated to the purchase of American parts.Among the top 92 suppliers of Huawei, 33 are American companies.

Bloomberg reported that the move was a nuclear bomb -level trick that the United States curbs China's rise.China Strategy and International Research Center Chinese Affairs expert, Scott Kennedy, said that this may destroy Huawei Hello; Hellip; Huawei is the most important company in China. It will threaten it in this way to trigger a huge public response and the Chinese government's response.EssenceThe China -US bilateral trade negotiations are just like the thin ice, and the move may be completely derailed.

The report also said that the threat may make Beijing more worrying that Trump's wider goal is to curb China's rise, which leads to the long -term cold war between the world's two major economies.

Moreover, Huawei is one of the fifth -generation communication equipment (5G) market leaders in the world.The United States blocked Huawei, and the negative impact on the global 5G market will be huge.Even if Nokia and Cisco can make up for a certain extent, the launch of 5G as a whole will slow down and will eventually cause harm to global telecommunications operators and consumers.

For the United States, this will also be a measure of killing the enemy and damage to 800.At the same time, the business of American chip giants such as Qualcomm to Micron will also be frustrated.

In response to the US attack, the Chinese government said on Monday that from June 1, the tariff rate of most of the US $ 60 billion of goods in the United States will be increased.It also said that China does not want to fight or wants to fight a trade war, but it is never afraid of fighting, and will accompany it to the end.All necessary measures will be taken to safeguard the legitimate rights of Chinese enterprises.

In addition, according to the US Department of Agriculture, which announced on Thursday, the same week in Trump's announcement of imposing tariffs on Chinese goods, Chinese buyers have canceled 3,247 tons of US pork import orders.This is the largest order for more than a year.

In March, China also reduced its U.S. Treasury holdings to its lowest level since 2017.According to data released by the US Treasury on Wednesday in Washington, China's US debt holdings have decreased by 10.4 billion U.S. dollars in the month, which has been reduced for the first time since November. Although the reduction of holdings is not large, it is enough to reduce holdings to two to two.Annual low point is US $ 112 trillion.

China is the largest debt country in the United States, and the reduction of U.S. debt by some people is regarded as a nuclear option in a deteriorating trade negotiation.

On the other hand, Chinese official media have recently made tough remarks on the trade war and exchange rate wars.Xinhua News Agency and the People's Daily of the Communist Party of China also reposted the WeChat public account of Tao Ran, which believed to be associated with the China Official Media Economic Daily, and pointed out that while the United States said that she would continue to negotiate, while small movements continued to destroy the atmosphere of the negotiations and did not show their sincerity. American officials didIt is meaningless to come to China to start trade negotiations.

On the afternoon of May 16th, in response to the news that the US Treasury Secretary said that he would have recently visited Beijing for consultation, a spokesman for the Chinese Ministry of Commerce said that China did not master the US plan to come to China.

At the same time, Chinese officials have continued to make confidence.Meng Wei, a spokesman for the National Development and Reform Commission of China, said at a press conference held in Beijing yesterday that although the Sino -US trade friction has a certain impact on the development of China's economic development, the impact is generally controllable; it will be fully judged that the U.S. tariffs will cause tariffs on the United States to increase tariffs on the United States.The influence of the impact should be promptly introduced in a timely manner to ensure that the economy is running in a reasonable range.

However, the April economic data announced by China on Wednesday is not as good as expected, showing that the Chinese economy has lost motivation before the tariffs increase.

If the trade war continues, how will Chinese leaders deal with?Xie Dongming, an economist of Overseas Chinese Bank, believes that there may be three methods, including the depreciation of exchange rates, loose monetary policies, and positive fiscal policies.But given that China will not take the initiative to pursue the devaluation of the renminbi, he believes that monetary policy or fiscal policy may play a more important role.

Liu Aihua, a spokesman for the National Bureau of Statistics of China, mentioned on Wednesday that the macro policy space for the economy to support the economy is still relatively large; if necessary, you can find further tax cuts, increase infrastructure expenditure, reduce policy interest rates and bank deposit reserve ratios.

Elephant fighting grass must suffer

In any case, the two elephants, the United States and China, the world's first and second -largest economies, will inevitably suffer.The global market has continued to be in the ups and downs of ups and downs this week.

The Chinese stock market alone, as of yesterday, has fallen for the fourth consecutive week. Yesterday, the Shanghai Composite Index closed down 2.5%to 2882.30 points, and this week has fallen 1.9%.The CSI 300 Index also closed at 2.5%, and fell 2.2%.

Whether the market will break the exchange rate of the RMB against the US dollar will also heat up recently.The offshore RMB fell to the lowest since November 30, 2018, fell below the 6.94 range, and wiped out the Chinese President of China ... All the increases since meeting with Trump at the G20 meeting in Argentina on December 1 last year.The RMB against the US dollar has also hit the lowest since December.The depreciation of more than 1.3%has been depreciating in the shore this week.

Huang Guoying, director of the Asset Management Department of Hong Kong Fengsheng Financial Group, analyzed that the trend of the RMB is weak because in the trade war environment, people usually look at more US assets, and the US dollar has recently performed strongly and has also cracked down on emerging market currencies.

In view of the connection rate system linked to the Hong Kong dollar and the US dollar, buying Hong Kong stocks can avoid the risk of depreciation of some RMB. With the acceleration of the depreciation of the RMB, investors in mainland China have been in danger, and the Hong Kong Stock Connect trading has also been enthusiastic this week.

In the case of the Sino -US trade war, global investors are expected to align with mainland investors and prepare for the worst case.