China now has a greater reason to hit back on anything the US will throw at them as the Washington-Beijing trade war further escalates with President Donald J. Trump threatening to slap 25 percent tariffs on USD$200 billion worth of Chinese exports. Financial analysts are speculating that the Asian giant could simply devalue its yuan at an approximate rate to answer the rising tariff cost.
According to the Chinese Ministry of Commerce, the Asian powerhouse is "fully prepared" and will take no hesitation to retaliate in similar terms against the Western country.
"...to defend the nation's dignity and the interests of the people, defend free trade and the multilateral system, and defend the common interests of all countries," the statement from the office ministry was quoted over at CNBC.
According to the latest report from CNN, the Trump administration is now on the verge of hitting 25 percent tariff on products coming from China amounting to USD$200 billion.
This is doubled from its initial proposed rate of 10 percent increase, which the White House had earlier submitted to the Office of the United States Trade Representative.
In light of this revision, USTR chief Robert Lighthizer said that Trump's decision to increase the rate coincides with his plan to force the country's Asian economic counterpart "to change" its ways.
"The increase in the possible rate of the additional duty is intended to provide the administration with additional options to encourage China to change its harmful policies and behavior and adopt policies that will lead to fairer markets and prosperity for all of our citizens," Lighthizer said.
Some analysts, however, are quite cynical on Washington's arm-twisting tactics. As pointed out by Market Watch, Trump is naïve enough to think that Beijing would back down from these threats. One of the weapons China currently has in its arsenal is its control of the yuan value.
According to the finance publication, the Chinese could just simply turn down the value of its money to offset the 25 percent tariff put on its goods. In effect, the American consumers will still be able to make a purchase of these Chinese imports with prices virtually falling in the same range as last year's.
And this won't be all. Market watchers are anticipating on China hitting US goods with the same treatment. Just recently, Beijing imposed additional duty on agricultural products including beef and other beef products. In a previous report, it is indicated that the US cattle farm industry will be the first to take the hit on China's retaliatory move.
In a statement released at a press briefing in Beijing, Chinese Foreign Minister spokesperson Geng Shuang said that China will remain "firm and clear-cut" in its stance against anti-globalization and protectionism.
