As China’s central bank frees up funds for a looming trade war, Trump deserves at least ‘one out of three cheers’, affirms a senior analyst at one of the world’s largest independent financial advisory organisations.
The comments from Tom Elliot, deVere Group’s International Investment Strategist, come as U.S. President Donald Trump appears to be on the cusp of escalating his trade war with China.
Mr Elliott observes: “This week, the Trump administration is likely to reveal plans to limit Chinese investment in American firms and block the ability of U.S. companies to some high-tech products to China.
“Meanwhile, China’s central bank reducing its reserve requirements for its banks is significant. Is it just to add pressure on the U.S., by looking like they won’t back down and are preparing the economy for the worst? Or do they actually think no agreement to avert trade wars will be reached and that this is necessary?”
Relaxing bank reserve requirements allows banks to lend out more money than before, a move generally taken in the face of a weakening economy.
Mr Elliott goes on to say: “The escalating dispute with China is as much about legitimate U.S. security considerations as it is about Trump’s apparent lack of understanding of the benefits of free trade.”
The Trump administration objects to what they see as the stealing and forced licensing of U.S. technology, by China, from American companies that do business in China.
“On this the EU, Australia and Japan are in agreement, but show far less willingness to stand up to China. So, Trump deserves at least one out of three cheers for what he’s doing.”
