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The Effects of Trade War Begin in China and South Korea

Jakarta -The trade offensive from US President Donald Trump against China, ranging from threats via Twitter to live talks, began to show an impact.

China’s Purchasing Managers Index (PMI) for June, released at the end of last week showed export demand contracting. It is the clearest sign of the negative impact of trade wars, affecting economic growth.

As for starting Friday (6/7/2018), the two largest economies in the world that will begin to throw each other higher tariffs between each other.

It also became the focus of policy makers in Beijing today. The reason, China is now facing the delicate task of balancing support for its economy, which has slowed down as efforts to control excess credit.

Despite the strong service sector, with the desire to widen the current stimulus opening, Panda State is expected to remain on track to touch its growth target of 6.5% by 2018.

“The Chinese economy will slow down until the end of the year, but not to worry about it. The key is the development of international trade and disputes between China and the United States, “said Zhu Qibing, chief macroeconomic analyst at BOC International China Ltd., Beijing, as quoted by Bloomberg, Monday (2/7/2018).

The China Bureau of Statistics (NBS) noted China’s PMI Manufacturing Index was at 51.5 in June, down from 51.9 in the previous month. However, China’s PMI non-Manufacturing Index that covered the services and construction sector grew to 55 in June from 54.9 in the previous month. An index above the 50 level indicates an improvement.

Meanwhile, the sub-index for export demand fell to 49.8 in June compared to 51.2 in the previous month. It shows a decrease in demand from other countries.

In addition to China, declining demand was also seen in South Korea’s exports in June. One of the causes is seasonal factors, such as fewer days of work. However, South Korea is a major supplier of computer chips and other components to China, which contributes to a quarter of its exports.

South Korea’s economic data that came out earlier than most other countries became an early reminder that the health of global commerce has entered the risk of a trade war.

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Written by DI

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South Korean exports contract in US-China trade dispute

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