Trade war that break out by U.S. is now hurting China as its exports to US is more than its imports, however, even that less import is technologically very important to China as this cheap country was always a good destination for manufacturers to establish their businesses there. Weeks of falling in Asian markets’ indexes and only sudden tiny margins of surges for rising of such shares prices also contribute to hopelessness among Chinese businesses. This article considers the future of China as one of the biggest current economies.
China, which by many people is known by its low quality products, has the biggest exports to U.S. and many other countries in the world. This was useful to them as long as those countries were happy enough with their products. Recently and by initiation of trade war, a new look at Chinese industries has born that simply based on self interests of the Chinese export destinations. The countries are not happy any more even with high quality Chinese products as these products might make those countries import based and gradually a loser in global markets. U.S. targeted China with its arrow fired for the first time. This time China revenged but the end of the story was clearly known to U.S. administration: “China can’t last much in this trade confrontation.”
No doubt that the fall of Asian markets is a clear signal that makes investors prefer to wait more to see what might happen next; this waste of time is good to U.S. but destructive to China. Currency value is another signal which U.S. negatively had in recent 2 months, but now it’s reversed and China is losing this factor instead. The future of trade war is a big surrender to China or big losses in Chinese industries and fall of salaries or some inflation.
However, China might print some money to inject to markets or to fund bankrupted companies which will bring dissatisfaction to Chinese people of middle class and rise of inflation rate. Even if this fund added to the economy, China can’t compensate respective gold in return in short term. As if China tends to compensate this gap with buying gold or by product exchanging to rise its reserves , it will make gold more scarce and therefore will contribute to rise of gold price which will influence oil prices and dollar value too.
The hard work to China is to find exact gold production series where it will adhere to its buying that for example will be 30% of 200 billion dollars which is 60 billion dollars of gold in short term (one quarter). This can be very difficult as gold sellers might not risk to sell to China only in order to keep their old customers happy. Product exchange with gold is also not possible as importers can’t risk their reserves and their currency by helping China.
