China withdraws from trade talks with Washington

A woman passes by a restaurant with a poster depicting US President Donald J. Trump, stating that all US costumers will be charged 25 percent more than other customers starting from the day president Trump started the trade war with China, in Guangzhou, Guangdong Province, China, 13 August 2018. US President J. Trump announced on 10 July that US is preparing to impose 10 percent tariffs worth 200 billion US dollars on imported goods from China. These tariffs would affected mainly consumer goods. EPA-EFE/ALEKSANDAR PLAVEVSKI

China withdraws from trade talks with Washington


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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.

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