US-China Trade War Said to Undermine Supply Chains in East Asia

US-China Trade War Said to Undermine Supply Chains in East Asia

Source: United daily News

June 22, 2018

Heads of central banks around the world, including Europe, the US and Japan, this week attended the European Central Bank Forum on Central Banking 2018 in Sintra, Portugal, warning that the heightened tensions in international trade have undermined the business climate, and threatened global economic growth, so they called on every government to remain calm. Jerome H. Powell, chairman of the Federal Reserve System (FED), pointed out that “we have heard that businesses have decided to postpone investments and hiring. What’s more, no Central Bank has adequate capabilities left to grapple with a recession as the interest rate is near zero as well as the US’s room for expanding fiscal expenditures has been curtailed.”

 Haruhiko Kuroda, governor of the Bank of Japan, indicated that “the trade dispute interferes indirectly with the supply chains in East Asia. If the US-China tariff dispute continues to escalate and additional tariffs are implemented, it may significantly impact the supply chains in East Asia, consisting of Mainland China, South Korea, Japan, Taiwan and economies in South East Asia.”

The thorniest part that perturbs every Central Bank’s head lies in an increase in the consumer price index or a decrease in demand owing to the trade war, leaving stagflation. Facing the stagflation, every Central Bank will encounter a dilemma between curbing inflation and stimulating economic growth.

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