Global stocks sink on festering trade war

China and the European Union firmly oppose trade unilateralism and protectionism and think these actions may bring recession and turbulence to the global economy says Chinese vice premier Liu He

China and Europe warn trade war could trigger global recession

The only hope I hold out is that Donald is so unusual that he could back out of this brewing trade war and pass the whole thing off as a part of his ploy to get the trade barrier problem children - China and Europe - to the negotiation table!

In the defence sector, China's decision to position military hardware in built-up atolls in the South China Sea has sparked new security concerns throughout Southeast Asia.

However, Trump is targeting this plan by barring some technology exports to China, as well as by blocking firms controlled by China from investing in US technology.

The focus is thought to be on "Made in China 2025", which is Beijing's plan to dominate industries of the future such as robotics, electric cars and aerospace. President Donald Trump's trade clash with China has already fed global economic uncertainty. Katainen urged China to tackle overcapacity in its steel, aluminium, and other sectors including technology, the European Union said in a statement.

Jyrki Katainen, the EU's vice president on jobs and economic growth, added that actions like Trump's unilateral tariff hikes against China show that WTO rules on global trade had to change, the Associated Press reported.

The report, citing eight sources familiar with the plan, said such a move would put "Washington's trade war with Beijing on a potentially irreversible course".

Mnuchin's comment contradicts a May 29 White House statement, which said "the United States will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology".

US Treasury Secretary Steven Mnuchin vehemently denied the reports by Bloomberg and The Journal as "false, fake news".

The disagreements were also about U.S. tariffs on $US34 billion worth of Chinese goods that are scheduled to go into effect on July 6, which China said would trigger retaliation involving its imports of American soybeans and motor vehicles.

The bill would allow the Committee on Foreign Investment in the United States (CFIUS) to review transfers of minority interests in companies dealing with critical infrastructure or critical technology as opposed to full acquisitions.

According to the Rhodium Group, a research firm, Chinese investment in the United States fell 35 percent in 2017 from the record $45.6 billion in 2016, and has slowed to a trickle, just $1.4 billion in the first quarter of this year.

Trade tensions between the world's two economies have been escalating in the last few weeks. "I think we'll settle these questions, because we have established a very good relationship with President of China XI Jinping", he said.

"There are serious structural concerns about Chinese practices that can not be resolved without trust between the negotiating partners" and that trust is eroding in the current confrontation, he told AFP. As North Korea's closest ally and major trading partner, China exercises considerable influence over the reclusive nation.

The government official said the Treasury would invoke the International Emergency Economic Powers Act of 1977 (IEEPA) to devise the restrictions.

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