Why did futures stabilize this morning from minus 3?
- Another stage in the trade war - China vs. the US
– A new white paper published by China reveals China's position behind the trade war
China released an important document this morning on April 9, intended to clarify its position towards the US regarding their economic ties - this is a comprehensive white paper that lays out its red lines and includes dozens of policy details, data, and critical positions that could change the face of global trade.
Take a seat and read calmly for a moment, because China is not shy about its readiness to respond to unilateral US moves, and this is how it explains everything that is happening here...
Trade between China and the US – mutual benefit or trade war? The white paper notes that since diplomatic relations were established between the countries in 1979, trade between them has dramatically surged from $2.5 billion in 1979 to $688.3 billion in 2024! Cooperation between the world's two largest economies has created enormous opportunities.
In recent years, two-way investments between the countries have exceeded $260 billion – an insane amount, illustrating the level of economic complementarity that has led to 'shared growth'.
- However, China warns: unilateral US actions could disrupt this thriving trade, especially after the US imposed tariffs of over 100% on Chinese products. In response, China does not intend to sit idly by, and it emphasizes that it will take all necessary steps to protect its rights.
US tariffs – an opening for economic war?
Here things start to get interesting: China claims that US tariff actions violate WTO (World Trade Organization) rules, distort global supply chains, and endanger the multilateralism that promotes the global economy.
Furthermore, the tariffs only exacerbate economic problems within the US – leading to higher inflation, financial volatility, and labor market disruptions.
But that's not all
– China insists that such a unilateral approach will lead nowhere, and it has a history that proves its readiness to respond sharply and clearly.
'Trade wars have no winners' – China states, but it will firmly confront any further escalation.
China's response to Trump – the US goods deficit is not the only problem! China also responds to the issue of the US trade deficit, claiming that it is indeed an unbalanced economic structure, but it only affects trade in goods.
But if we look at the broader picture, trade in services between the countries is on the rise – and the data certainly indicates this.
In 2023, the US recorded a surplus in services trade with China amounting to $26.57 billion, which is a significant part of its overall surpluses.
In addition, China presented some important data: its imports reached a record high of $2.56 trillion in 2024, with these figures indicating continuous growth in trade, as imports rose by 2.3% year-on-year.
- To illustrate the growth in trade, China notes that trade volumes at its International Import Expo have exceeded $500 billion since 2018!
China complies with WTO rules, but insists on continuous improvement. China does not intend to rest solely on past successes. In the white paper, it notes its deep commitment to economic reforms.
- Among other things, increased market transparency, tariff reductions, and legal reforms that aid in implementing WTO rules.
What does this mean?
China has made a leap in reducing its tariff rate from 15.3% (2001) to 9.8% (2010), and around 9.4% today, which places it close to the tariff rates of the most developed countries.
The way forward – can a global trade war be avoided? Throughout the white paper, China emphasizes the importance of dialogue with the US and resolving differences through mutual respect and beneficial cooperation.
China understands the need for a stable relationship with the world's second-largest economic power, but they do not intend to leave their interests trampled.
They demand the reversal of tariffs and the resolution of disputes through dialogue.
Why is all this positive? China shows willingness to negotiate, China seeks a solution that is not an escalation of the war
Investors, meanwhile, see this as a positive signal, a first step in negotiations that have essentially already begun, which sends futures slightly higher
In summary:
The economic landscape is not expected to get simpler anytime soon. With new demands from China and a firm stance against unilateral US actions, the financial market may encounter additional tensions. But China shows it is not afraid to fight – and it is preparing to fight tooth and nail for everything related to its interests.
Will the economic disputes between China and the US be resolved peacefully or in a new global trade war?
- Time will tell, but there is certainly a chance that the financial world will not be the same...