With all the partisan narrative defining Trump as a tariff-setting, anti-trade, economy-buster, we thought it ironic that free-trade-wunderkid Obama just escalated trade wars by bringing his administration's 16th trade-enforcement complaint against China with WTO, urging tariffs on subsidised Chinese aluminum, after accusing them of funneling artificially cheap loans from state-run banks to producers.
While Rex Tillerson's confirmation hearing as Trump's Secretary of State was for the most part uneventful, several hours into his back and forth with the Senate Foreign Relations Committee, Tillerson compared China’s actions to those of Russia in Crimea, saying a failure to respond had allowed it to “keep pushing the envelope” in the South China Sea.
On the surface, relations between China's president Xi and Donald Trump have had a rocky start even before the president-elect's inauguration, with speculation about a trade war, tariffs, the collapse of the "One China" policy, the confiscation of a US naval drone, fly-bys over disputed islands, and non-stop jingoist bluster dominating the airwaves and local press. However, that may be merely bluster as the two leaders gradually warm up to each other, ironically, at a very cold place: Switzerland's World Economic Form held, as every other year, in Davos.
Submitted by Gail Tverberg via Our Finite World blog,
Some people would argue that 2016 was the year that the world economy started to come apart, with the passage of Brexit and the election of Donald Trump. Whether or not the “coming apart” process started in 2016, in my opinion we are going to see many more steps in this direction in 2017. Let me explain a few of the things I see.
China is so concerned about the ongoing surge in capital outflows that its forex regulator, SAFE, has taken the unprecedented step of ordering banks to keep its instructions about curbing capital outflows secret and also to ensure that research analysts do not publish any negative views about the yuan according to Reuters. According to bankers from local and foreign banks, both demands are seen as an attempt by the authorities to prevent alarm that could trigger further declines in the yuan.