Major financial officials in Asia are nervously watching recent trade tension between China and the United States brought on by President Donald Trumps proposal to levy stiff tariffs on Chinese exports.
If the Chinese economy ends up being negatively affected by a trade war with the U.S., China’s trading partners in developing Asian countries may also suffer. That’s why global economic analysts will be closely watching a meeting between U.S. and China negotiators in Beijing this week.
The major players in the meeting will be U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He. They will discuss an array of trade issues including what to do about tariffs. President Trump has made a significant issue about the U.S. trade imbalance with China.
Another factor that has China and many Asian countries on edge is the possibility of interest rate hikes in the U.S. by the Federal Reserve. Indonesian Finance Minister Sri Mulyani Indrawati said that higher interest rates in America ripple across the world with a “domino effect.”
U.S. Commerce Secretary Wilbur Ross will also play a major role at the Beijing meeting. He has made a point to lower expectations for any kind of major deal. Chinese officials have already been drawing some definite lines in the sand. For example, one Chinese minister said that his country “will not negotiate away its core interests” and will not accept “preconditions on issues.”
If the new U.S. tariffs get a green light from the White House, they will take effect in June after a 60-day consultation period.