Despite the lack of obvious action after the EU summit during June 19-20, I still think that a trade war between China and the EU is likely in the future. As noted in the article, Germany is now also backing calls for action, and wants particular pressure to be put on China appreciating its currency.
Now, I don’t think China appreciating its currency is likely because,
1. It’s not going to want other nations affecting how it manages its currency and,
2. If they want to convince China to appreciate, they need to convince other East Asian nations to appreciate as well. While Korea might be receptive, Japan doesn’t want to do more effective measures like increasing interest rates, instead stick to selling dollars gradually, while Taiwan will vehemently oppose any attempt to even criticize their management of the NTD.
Also something else: If the EU wants to negotiate a joint appreciation of all East Asian currencies, they will need to acknowledge Taiwan’s sovereignty in some way, which again, is a huge red line for China.
schildmanbijter on
Can someone with more monetary econ knowledge explain the accusations against China and whether they have merit?
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Despite the lack of obvious action after the EU summit during June 19-20, I still think that a trade war between China and the EU is likely in the future. As noted in the article, Germany is now also backing calls for action, and wants particular pressure to be put on China appreciating its currency.
Now, I don’t think China appreciating its currency is likely because,
1. It’s not going to want other nations affecting how it manages its currency and,
2. If they want to convince China to appreciate, they need to convince other East Asian nations to appreciate as well. While Korea might be receptive, Japan doesn’t want to do more effective measures like increasing interest rates, instead stick to selling dollars gradually, while Taiwan will vehemently oppose any attempt to even criticize their management of the NTD.
Also something else: If the EU wants to negotiate a joint appreciation of all East Asian currencies, they will need to acknowledge Taiwan’s sovereignty in some way, which again, is a huge red line for China.
Can someone with more monetary econ knowledge explain the accusations against China and whether they have merit?
What’s the US angle on this. Probably tariffs?