China accuses US of “trade bullyism”

September 2018

The trade war between the US and China continued to escalate during September. Following the US’s imposition of levies on US$200 billion-worth of Chinese products, China announced fresh trade tariffs on US$60 billion-worth of US products. In a bid to restore market confidence towards Argentina, the IMF expanded its financial bailout package to US$57.1 billion.

  • S&P affirmed its “A+” rating for China
  • The IMF expanded its financial bailout package for Argentina
  • Argentina’s economy shrank during Q2 by 4.2% YoY

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The trade war between the US and China continued to escalate during September. Following the US’s imposition of levies on US$200 billion-worth of Chinese products, China announced fresh trade tariffs on US$60 billion-worth of US products. While US President Donald Trump continued to criticise China’s “unfair trade practices”, China responded by accusing the US of “trade bullyism”.

“President Donald Trump continued to criticise China's “unfair trade practices””

China’s Premier Li Keqiang stressed that the country’s leaders would not intentionally weaken the yuan in order to support export activity, insisting: “Persistent depreciation will only do more harm than good to our country. Instead of engaging in competitive devaluation, we will stick to market-oriented foreign exchange rate reform”.

Credit ratings agency Standard & Poor’s (S&P) affirmed its “A+” rating and “stable” outlook for China, having previously downgraded its credit rating in September 2017 from “AA-” to “A+”. Citing the government’s reform agenda, prospects for economic expansion and strong external metrics, S&P expects China to maintain its robust economic growth and improved fiscal performance over the next three to four years. Risks to China’s economy and financial stability are predicted to reduce following policy changes that have reined in credit growth and reduced reliance on public investment. 

Looking ahead, the future trajectory of China’s rating with S&P appears to lie with its credit growth: S&P said it might upgrade its rating if credit growth decelerates substantially, but could also downgrade if growth is allowed to increase. Although China’s macro-leverage rate is not low in the global context, it is also not the highest, according to Chinese premier Li Keqiang, who drew attention to China’s high savings rate alongside measures taken by authorities to stabilise the leverage ratio. The benchmark Shanghai Composite Index rose by 3.5% over September as a whole.

In a bid to restore market confidence towards Argentina, the International Monetary Fund (IMF) expanded its financial bailout package, raising it from US$50 billion to US$57.1 billion. IMF Managing Director Christine Lagarde highlighted the “great deal of work (that) remains to be done if Argentina is to respond effectively to the current challenging circumstances”.

Argentina’s economy contracted at an annualised rate of 4.2% during the second quarter of 2018, having expanded for the previous six quarters. Exports fell sharply, dropping by 14.2%. The country’s leaders announced a range of austerity measures during September, including increased taxes on some raw materials.


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