The trade war between the United States and China keeps dragging on, and this standoff has affected economic activity in the two countries significantly. The two governments have failed to reach an agreement, and analysts believe that chances of a deal being reached anytime soon are slim.
Chinese factories have experienced subdued and shrinking activity over the last four months. August saw slow business continue to affect factory activity as the United States continues to pile on the pressure on China. International trade has been affected by the tariffs imposed by American and domestic demand for the products has also slowed down.
The Chinese economy as a whole has slowed down over the course of the trade war, and there may be pressure for the government to find ways to stimulate the economy quickly. If this slow down continues as it is, it might be one of the biggest economic downturns of the decade worldwide and citizens will be expecting the Chinese government to act more aggressively in its efforts to increase economic growth.
Trade war continues to escalate
While corporations in China and the US are hoping that the two governments come to a resolution, the trade war and tension between the governments continue to escalate. President Donald Trump announced that his government would be imposing a new set of tariffs on Chinese goods which would go into effect on the 1st of September.
This announcement came after China had retaliated with its own set of tariffs on US goods. The new tariffs imposed by President Trump will cover all Chinese products, and this could have far more devastating consequences on the Chinese economy.
The two governments are scheduled to meet in September and engage in further talks, but President Trump already said that the planned meeting would not stop the new tariffs from going into effect. He went on to say that China wants to find common ground soon because of the pressure on its economy and the job losses being faced by workers in its industries. If President Trump’s statements are anything to go by, the US government has no intentions of giving in, and they would rather wait until China does.
Chinese service sector cushioning economic blows
The strength of China’s service sector has been vital in preventing a complete economic meltdown in the country. The service sector has protected the economy from the effects of trade uncertainty and crippled manufacturing industry. The services sector has experienced some growth in August, the first time in five months.