Ren Zhengfei, the CEO of Huawei, told the press his daughter Meng Wanzhou is the face of the trade war between the U.S. and China. Canadian customs arrested Meng last December when she arrived in Vancouver. Meng is the CFO of Huawei. She has a home in Vancouver. Canadian customs got a tip from the U.S. State Department. The State Department claims Meng violated the sanctions against Iran.
Huawei does business in countries around the world. The U.S. claims Meng used a financial tool to circumvent the sanctions. But the U.S. didn’t provide any proof Meng helped Iran. Customs officers seized Wanzhou’s electronic devices before they arrested her. Canada sent the information they recovered from her devices to the U.S. State Department. Chinese ambassador Cong asked Trudeau to release Meng last week, but she has another court date in January. He lawyers claim Meng’s arrest violated Canadian law.
China feels the impact of the trade war. Rural banks in China have financial issues due to a lack of support from the government. Recent bond restructuring as well as out-of-control consumer debt, plus, the tariff stress did a number on state-owned companies and small lenders. China’s weakened manufacturing sector also plays a role in the country’s economic slowdown. The Chinese economy hasn’t grown this slow in more than 30 years. A Chinese government report claims economic growth at the end of December could be less than six percent.
American consumers mirror Chinese consumers in terms of carrying too much debt. Thirty-three percent of holiday shoppers will depend on a loan to do their holiday shopping this year. Last year, only 16 percent of shoppers needed a loan to buy gifts. Consumer debt in the U.S. is not as high as consumer debt in China. But if the Feds cut interest rates at the December 11th board meeting, American consumers will use the lower interest rates to accumulate more debt. More consumer debt will have an impact on 2020 economic growth, according to several economists.
America’s economy, as well as Chin’s economy, have serious economic wounds from the trade war. But China and the U.S. aren’t the only countries trying to keep their economic heads above water. South Korea’s export business is in the toilet thanks to the tariff battle.
South Korean exports fell 14.3 percent in November. Exports to China also took a beating thanks to a major global price drop in the semiconductor sector. Semiconductors are one of South Korea’s top export products.
Source: https://www.ft.com/content/17bc3560-1289-11ea-a225-db2f231cfeae
Dil Bole Oberoi
