US's President Donald Trump and China's President XI Jinping in their last meeting - Photo by The State Council The People's Republic of China

JAKARTA (TheInsiderStories) – Pressures on the financial market came from the news that China has canceled trade talks with the United States (US) administration. In addition, China has called off a joint military meeting with the US scheduled for next week.

The development shows that tension between the world’s two largest economies is still escalating and starting to spread to other areas outside trade. This sets up the possibility of no deal to reduce tariffs in this year, which would mean the tariffs would jump to 25 percent on Jan. 1, 2019.

Last week, US’s President Donald Trump has been announced another slate of tariffs on the remaining $267 billion worth of Chinese imports. Followed the decision, on Sept. 24, China published a white paper to clarify the facts about the two’s economic and trade relations, demonstrate  its stance on trade friction with the US and pursue reasonable solutions.

The 36,000 white paper is comprised of six parts, the trade protectionist practices of the US administration, the trade bully-ism practices of the US administration, damage of the improper practices of the US administration to global economy, and China’s position.

The white paper said the two countries are at different stages of development and have different economic systems, and therefore some level of trade friction is only natural. “The key, however, lies in how to enhance mutual trust, promote cooperation, and manage differences.”

In the spirit of equality, rationality, and moving to meet each other halfway, the two countries have set up a number of communication and coordination mechanisms such as the Joint Commission on Commerce and Trade, the Strategic and Economic Dialogue, and the Comprehensive Economic Dialogue, the white paper said.

However, the new administration of the US government has trumpeted “America First” since taking office in 2017, and has abandoned the fundamental norms of mutual respect and equal consultation that guide international relations, said the white paper.

“Rather, it has brazenly preached unilateralism, protectionism and economic hegemony, making false accusations against many countries and regions, particularly China, intimidating other countries through economic measures such as imposing tariffs, and attempting to impose its own interests on China through extreme pressure,” according to the white paper.

The white paper stressed China has responded from the perspective of the common interests of both parties as well as the world trade order, observing the principle of resolving disputes through dialogue and consultation, and answering the US concerns with the greatest level of patience and good faith.

The Chinese side has been dealing with these differences with an attitude of seeking common ground while shelving divergence, the white paper said. “It has overcome many difficulties and made enormous efforts to stabilize China-US economic and trade relations by holding rounds of discussions with the US side and proposing practical solutions.”

However, the US side has been contradicting itself and constantly challenging China, the white paper said.

“As a result, trade and economic friction between the two sides has escalated quickly over a short period of time, causing serious damage to the economic and trade relations which have developed over the years through the collective work of the two governments and the two peoples, and posing a grave threat to the multilateral trading system and the principle of free trade.”

The Chinese government published the white paper to clarify the facts about China-US economic and trade relations, demonstrate China’s stance on trade friction with the United States, and pursue reasonable solutions.

China-US economic and trade ties concern not only the well-being of the peoples of the two countries, but also world peace, prosperity and stability, the white paper said. “Cooperation is the only correct option for China and the United States, and only a win-win approach will lead to a better future. China’s position is clear, consistent and firm.”

Financial Market

Almost all Asian Currencies struggled today as the US dollar going stronger amid the US-China trade war and ahead of the Federal Reserves meeting starting Tuesday (26/09). The Fed is expected to raise interest rates for the eight time since late 2015.

Beside the Fed, this week several regional banks like Indonesia,Taiwan, Philippines, New Zealand and Bank of Japan are widely expected to raised its key interest rates. Indonesia central bank has raised its benchmark rate by 125 basis points over four hikes this year.

However, the policy yet give significant impact to the financial market. So far, the local currency has shed 9 percent against the dollar in this year.

Other factors has affected the emerging market is the rising of oil prices. The Brent price has rising to $81 dollars a barrel today. These various factors is expecting will give more pressures to the emerging countries.

The region worst performer for today was Indian Rupee. Rupee slipped 0.3 percent to 72.815 over the American dollar and Rupiah weakened 0.34 percent to 14,910 against the greenback from the yesterday at 14,860. While, the Philippine peso dropped 0.2 percent to 54.337 per US dollar, the lowest level since the end of 2005.