Following threats from New Zealand central bank regarding a potential inflation in the United States and a higher interest rate level brought about by Trump’s administration and its protectionist principles, the US President finally broke his silence with China in a letter to Chinese president Xi Jinping stating that he wishes to work with the country in a constructive relationship to benefit both country’s economies.
In the letter which included a greeting for the country’s Lunar New Year celebration which is the most celebrated holiday in the country. Trump also thanked Xi for the letter he sent on his inauguration and added that he looked forward to working with the Chinese president.
This came out as a surprise to some markets and investors as Trump recently spoken against China and accused them of robbing Americans of jobs in the manufacturing sector and even threatened to continue to call China a currency manipulator. Aside from this, he also stated that he intends to impose higher tariffs on products and services from the country and raise more trade complaints against China.
President Trump also received a call from Taiwan President Tsai Ing-wen last December upsetting China who sees Taiwan as a country without a right to any formal diplomatic agreements with other countries. US Secretary of State Rex Tillerson also stated that China should not be given approval of access to the islands in the controversial South China Sea.
China in return has stated numerous times that it currently has smooth contracts with the current administration and has remained in touch with the United States according to the Foreign Ministry in Beijing. Chinese diplomat State Councillor Yang Jiechi reportedly talked to Trump’s security advisor Michael Flynn recently regarding China’s hopes on working closely with the US in their wishes to avoid disputes and other issues. Meanwhile, the country who is currently celebrating the Lunar New Year to end this Saturday on the Lantern Festival has yet to comment on the letter from the White House.
Chinese Economy To
Rise Until 2050, the US In Jeopardy
Along with the untimely announcement of Trump’s letter to the Chinese president, there is currently an outlook for China’s economy to surge and overtake the United States by 2050.
According to economists, China’s gross domestic product might go up by as high as $58.5 trillion, while India who will potentially overtake even the United States by $44 trillion while the US currently has a GDP outlook of $34.1 trillion.
The report was based on current market exchange ratings which show that Chinese and Indian economies are to rise significantly in the following years until 2015.
Effect of Trade War Between US and China
At the moment, there are current threats from US President Donald Trump to impose heavy tariffs on Chinese exports before he sent the letter extending a proposal of a constructive relationship which has eased the tension between the two countries.
The previous tariff threat from Trump initially caused the markets to expect a potential trade war between the two countries which will result in a 25% decline in Chinese exports.
There is currently an impending trade war should China decide to ignore and not cooperate with the United States which would greatly affect the US rather than China but currently, investors and analysts are strongly betting an agreement to be reached between the two countries as China can benefit from the potential tourism venture in the US while the latter could help fill their trade gaps through a partnership with China. While China may ask for a lesser tariff from the US, Trump still have the capability to place tariffs on products which are not challenged by Chinese products.