A New Cold War Between US And China: Can Markets, Global Economies Bear This Trauma?

US china cold war

While market participants are hoping that the trade talks between the United States and China might materialize in the meeting which is scheduled for this month, it seems like these economies have a different trajectory being sewn. The International Monetary Fund or IMF also stated that it the trade tensions between them increases, the Australian economy would be largely impacted. It seems like the possibility of this is increasing which calls for the reshuffling of the portfolios of the Australian investors. The initial stages of the fresh and new cold war might prompt the countries to pick up the sides. The global market trackers are expecting that there are no chances that the trade talks between the two leading economies would end on the positive note. Elevated tensions between them would raise the conflicts which could derail the global growth momentum.

The market trackers are expecting that this cold war would be played in two stages. The first stage revolved around the trade battle and has started as the Trump administration has been continuously slapping tariffs on the Chinese imports in order to reduce their contribution to the global supply chain. The second stage would be revolving around the conflict in regard to the technology. The market players are of the view that Vietnam as well as India would try and remain out of this kind of cold war. However, other countries which are in South-East Asia would try to not to indulge in a fight with China. 

Moreover, the Asia-Pacific region, which is regarded as the “world’s most dynamic region” is expected to witness the negative impacts and hence, will eventually slow down. As per the global market readers, amidst the tensions pertaining to the global downturn because of the initial stages of the cold war, one can only dream about the settling global conditions as well as strong economic growth. They are of the view that the Australian economy would be facing lots of challenges because of the cold war.

As the investors are aware that a fall in the technology stocks would, in turn, lead to a decline in the broader markets, the tariffs on the Chinese goods have started to show impact on the financial numbers of the big US companies which are having operations in China. Apple Inc. (NASDAQ: AAPL) ended its recent quarter and the growth from the Chinese region was not very much appealing. This performance from one of the largest technology giants of the United States was not expected by the market participants as the company has even rolled out new iPhones which helped the technology giant in increasing the penetration. Moreover, the Chinese markets have also witnessed a substantial downtrend in 2018 and the global economists are expecting that the Chinese GDP is expected to witness a decline moving forward into 2019. The slowing Chinese economy is not a good sign for the economy of Australia as they both are trading partners.


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