It looks like global financial markets better get strapped in for another trade war between the world’s two largest economies. If last year’s trade dispute wasn’t bad enough, we still have the coronacrisis still lurking in the shadows around the world.
So, what happened now?
Bloomberg broke the news that the Chinese government has mandated state-owned agricultural firms to suspend purchases of American crops, including soybeans and pork.
Apparently, Beijing is not happy over U.S. interference in its relationship with Hong Kong. While China’s national security laws are egregious and bypass Hong Kong’s semi-autonomous state, Washington would not appreciate China imposing itself in its relations with Puerto Rico.
US-China trade relations are back in the news as Beijing reportedly mandated state-run agricultural firms to halt purchases of US pork, soybeans, and other farming goods. Private companies have yet to be given the same orders. Cofco and Sinograin had submitted pricing inquiries for as many as 30 cargoes of American soybeans last week, but now they have reportedly suspended purchases due to the new requests from the federal government.
Bloomberg notes that China is engaging in terse behavior over Washington’s actions on the Hong Kong issue. On Friday, President Donald Trump warned that it would slap sanctions and other tough measures on Chinese and Hong Kong if Beijing moved ahead with implementing national security laws on Hong Kong. Critics allege that the legislation, which would bypass Hong Kong’s legislature, would effectively outlaw large-scale demonstrations and imprison opposition figures.
Premier Li Keqiang reiterated the country’s promise to implement and abide by the phase-one agreement from January. Under the provisions, China would purchase $36.5 billion in US farm goods this year, but it has only imported about $3.35 billion in the first quarter of 2020. Both sides have engaged in a war of words over trade and Hong Kong. Both sides have reaffirmed their commitment to the first phase, but recent actions have sparked some consternation over the future of the trade deal.
The U.S. intervening in the domestic affairs of a foreign nation, China potentially violating the terms of the trade deal, and two nations bent on a new Cold War.
What could go wrong?
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