Point of no return: China strikes first US pain

It seems that it has begun ... Stubbornly and enthusiastically playing the international "tug of war" Washington and Beijing still overdo it, in practice proving the relevance of one of the most popular "Murphy laws": "If you break something for a long time, it will certainly break!" That's just "something" in this case - this is the whole world economy.





The beginning panic in global financial markets, of course, is not yet a general crisis, however, the first and one of the most true symptoms of its approach. Let's try together to understand what is happening and understand what are the chances that the world will be able to overcome the current "turbulence" without falling into a new economic chaos.

Point of non-return

In truth, the first bad premonitions began to take hold of many financial analysts right after the end of the 12th round of Sino-US negotiations in Shanghai, which are already turning into a real soap opera - both in terms of the number of episodes and their melodramatic character. The glued smiles of the US Treasury Secretary, Stephen Mnuchin, and the American sales representative, Robert Lightheiser, in the photo taken after the summit did not inspire the slightest confidence, nor did the on-duty phrases of the Chinese "Xinhua" broadcasting about "constructive, productive and frank negotiations. "

In fact, the meeting ended earlier than planned, and this alone gave serious reason to assume that everything was bad. That is how it turned out to be in reality. By the next round of trade negotiations, scheduled for September this year, Donald Trump has prepared the Celestial Empire with a “premium present”: the introduction of regular trading duties of 1% on Chinese goods worth $ 10 billion from September 300.

The whole point is that this decision does not mean just new restrictive tariffs on Chinese exports, but, first of all, that from now on it will be levied with all duties in the USA, without the slightest exceptions and exemptions. These are no longer economic “local battles”, but a total war. Attempts to comply with any conventions and “knightly rules of warfare” in it are completely discarded. Beijing, as expected, immediately responded in the same spirit, that is, a blow with a swipe and with all its might. First of all, all import of agricultural products from the USA was suspended in the country. Great move! Last month, the United States government has already announced that it is forced to allocate $ 16 billion in financial assistance to American farmers, which will be compensation for the losses incurred from the fall in exports of their goods to the Celestial Empire. Last year, we recall, Washington had to fork out 12 billion on the same occasion. What's next?

However, a much more unpleasant surprise for the United States (and not for them alone) was the unprecedented decline in the renminbi since 2008 to 7.2 per dollar. The White House immediately roared the beluga about the "currency fraud" and Beijing, as it were, "reversed." However, all experts agree that this currency leap was a demonstration of his readiness to finally switch to "fighting without rules." Is the "point of no return" in the "trade war" between the countries already passed and no reconciliation between them can be expected?

Burning billions

If so, truly sad times await the global economy. Back in May of this year, leading economists at Bloomberg tried to build a model of events that would befall her if the battle between Washington and Beijing continues. The forecast turned out, frankly, disappointing. According to analysts, in this version of the world GDP next year, "sag" by at least 600 billion dollars. However, the negative processes have gained such strength that even if at least a “bad world” is achieved, the consequences cannot be avoided anyway - in any case, the production rate will slow down all over the world. The United States itself expects a drop in GDP of 0.2%, China - by all 0.5%. It seems to be trifles, but recession is in no way an upsurge.

I must say that one of the most unpleasant moments in what is happening is that with his, to put it mildly, unpredictable and eccentric behavior, Trump is increasingly becoming for Beijing a completely non-negotiable figure. The same new round of negotiations planned for next month is now in big question. It is very likely that the Chinese, following one of their most famous philosophical principles, will prefer to wait until they float past them, after the 2020 US presidential election, political the corpse of the one who exhausted them so many nerves. And then they will try to find a common language with his successor.

Incidentally, this is the opinion of the analysts of the American Goldman Sachs, who argue that until 2020 and the change of the owner of the White House, no agreements between Washington and Beijing are worth dreaming of. The question is different - will the global economy have enough margin of safety until this moment? Trump's announcement about the impending new tariffs alone caused the stock market "crash", which, first of all, was firmly "attached" by the US itself - on August 5, the Dow Jones index went down by 767.27 points (2.90%), the S&P 500 index, which includes the 500 most large companies of the US market fell by 87.31 points (2.98%), and the Nasdaq electronic exchange index "dived" and did by 278.03 points (3.47%). The next day, it was the turn of the Asia-Pacific region. There, in turn, all the indices on the stock exchanges “showered” - from the Japanese Nikkei 225 and Topix to the Chinese Shanghai Composite, Shenzhen Composite and Hong Kong Hang Seng.

However, the rest of the “Asian tigers” are also “unhealthy”: the shares of companies from South Korea, Hong Kong, and even Australia are falling in price. The erupted "financial tsunami" does not spare anyone! As it became known, in recent days 21 of the billionaires listed in the Bloomberg Billionaires index have lost a billion dollars each. Amazon's founder, Jeff Bezos, lost 3.4 billion. The poor things left only 110 ...

How does this threaten Russia?

However, before you grieve over the “hard fate” of the richest man on planet Earth, let's better think about what specific troubles the impending crisis wave can bring us and you. I must say that there are certain causes for concern today. And they are associated with the devaluation of the renminbi. What is it fraught with for Russia? Yes, nothing good ... Recall that not so small a part of the gold reserves of the Central Bank of Russia is stored in this currency. Losses, and quite serious ones, are inevitable here.

Also, the Celestial Empire can reduce the purchase of our agricultural products, and, what is most unpleasant - energy. A living example of Turkey, after the global collapse of the lira sharply reduced the consumption of Russian gas, everyone has before their eyes. However, there is an alternative. Complete transition in transactions between countries to national currencies. However, in this case, we have all the same inflation risks. Except that importing a wide variety of consumer goods from China will become even more profitable for Russian companies - there is a definite plus.

With all this, by the way, there is a danger that the “weakened” yuan will create additional advantages for Chinese exports over Russian, for example, on the steel market. And if other Asian countries join the devaluation policy of Beijing (and the likelihood of this is quite high), the world will generally begin a “currency war” of all against all with extremely unpredictable consequences, especially for exporting countries. In general, the impending global crisis, by definition, can not bring anything positive for any country.

For Russia, for example, the main danger is the decline in world oil prices (which is already taking place, albeit not at a landslide pace), and other energy carriers. The fall in business activity, industrial production, will inevitably hit everyone without exception. And it seems that this is all the way to go - the PMI industry index of business activity now shows the lowest rates since 2012. One can only hope that the current mutual demarches of Washington and Beijing will remain a "muscle game." Otherwise, September 1 of this year threatens to remain in the history of mankind another "black" date ...