Events Review (02.07–08.07.2018)
I. Major Events and Trends in the Development of the Situation In and Around China
A significant problem in the global economic system is the escalation of trade war between the United States and China, which is entering a qualitatively new level. July 6, 2018, came into force US President D. Tramp's decision on the introduction of 25 % of the customs duty on more than 800 items of Chinese goods. In response, China has raised customs tariffs for about 550 items of American goods shipped to the Chinese market.
At the same time, Beijing called on other countries to join forces in countering the USA's protectionist policy. In particular, China has come up with a proposal to the EU on joint actions against the US in the World Trade Organization (WTO). EU leaders are so far refusing to take such a step, but do not deny the possibility of cooperation with the PRC within the framework of the WTO. During the “China-EU” summit of July 16–17, they are going to sign a joint communique on the intention of the parties to set up a working group to modernize the World Trade Organization.
| Escalation of trade war between the United States and China |
According to experts, the beginning of the trade war between the United States and the PRC will have negative consequences for the whole world, due to their leading role in international trade relations. For example, in 2017, the volume of bilateral trade between the United States and China amounted to 583.7 billion US dollars, with a growth of 15.2 % in annual terms. The PRC accounts for 26 % of the Boeing aircraft export, 15 % of US agricultural production (including 56 % of soybeans), 16 % of cars, and 15 % of microchips.
Despite China's positive balance in its trade with the United States, this does not mean China's win in trade relations with the United States of America. In fact, about 40 % of the balance is provided by American companies operating in China. In addition, last year, US exports to the PRC allowed to create about 1 million jobs for American citizens.
The following trends have come to a halt after D. Trump's turning to hard protectionism in trade and economic relations with China. In January–June 2018, the volume of export of goods from the PRC to the USA grew only by 5.4 % (yoy), which is 13.9 % below the level registered in the same period of 2017. All this had a negative impact on the general indicators of world trade.
| U.S. goods trade with China year-on-year growth, January 2017 – April 2018 |
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The article is available in Ukrainian
