Published: Sat, October 13, 2018
Money | By Bruce West

Trump, Xi to meet amid trade war tensions

Trump, Xi to meet amid trade war tensions

"Their economy has gone down very substantially".

China's stock market has plunged this year but the trade war has also started to erode Trump's oft-touted USA stock gains, with the Dow Jones Industrial Average down more than five percent for the week.

"We expect the dynamic to change once we get a bit deeper into this, but for now China is trying to outrun the next round of tariffs", he said.

China's trade surplus with the USA grew 10 percent in September from a record $31bn in August, according to China's customs administration - a 22 percent jump from the same month past year.

China has responded by imposing counter tariffs, which the Trump administration alleges show political interference by targeting products from key states in next month's congressional elections.

President Donald Trump regularly cites the United States' massive trade deficit with China as a primary justification for his decision to implement tariffs.

Treasury said in its April report that it is considering expanding the number of countries it examines from 13, with analysts speculating that the number could go as high as 20. Trump also on Wednesday renewed criticism of the Federal Reserve for raising interest rates, calling it a "mistake" and later reiterated his view in a Fox Business interview that the Fed "is going loco".

"The fundamentals of the US economy continue to be extremely strong, I think that's why the stock market has performed as well as it has".

The Wall Street Journal and the Washington Post both cited officials saying Trump has made a decision to proceed with the meeting with Xi.

In an interview with Bloomberg News on Thursday, Mnuchin declined to comment on the report. The Chinese currency has been falling in value against the dollar in recent months, raising concerns that Beijing is devaluing its currency to make Chinese goods more competitive against US products.

Mnuchin met Thursday with Yi Gang, head of China's central bank.

A cargo ship is seen at a port in Qingdao in China's eastern Shandong province on Friday. They also expressed concern about use of the technology in weapons.

President Trump has taken a hard line stance against China, vowing to increase tariffs until a fair trade agreement can be reached.

While China is one of six countries on the "watch list", the last report in April acknowledged that the RMB "generally moved against the dollar in a direction that should" help reduce China's trade surplus with the United States and had strengthened early in the year.

The yuan has fallen for weeks against the USA dollar, dropping nine percent in the past six months, which mitigates the rise in the price of Chinese goods caused by punitive United States tariffs.

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