China has called off two separate delegations due to arrive in Washington for negotiations, the Wall Street Journal reported on Friday.
The news indicates a culminating crisis that threatens to have side effect for Europe, as the world two biggest economies are locked in a negative spiral of retaliatory tariffs.
Last week President Trump introduced the second wave of tariff rises, with 10% import duties slummed on $200bn worth of goods. In January 2019 US tariffs will surge to 25%.
China responded with retaliatory tariffs on $60bn worth of US imports.
The Chinese economy is currently moving away from manufacturing and export-led growth to focus on infrastructural development, domestic demand and services. Investment represented 44% of China’s GDP growth in 2017, compared to 25% in other developed economies.
However, credit-led growth is testing the resilience of the economy. Estimates of China’s public and private debt range from 250% to 300% of its GDP, or about $28 trillion.
Competitive currency devaluations have also been used since 2008 to maintain the level of growth, triggering the wrath of its trade partners in Europe and the United States.