Forget US-China trade war tariffs, this is what really worries Asia
There’s no sign – yet – that China is preparing to devalue its currency in retaliation for ever-increasing US tariffs. But if it does pull the trigger, then it would probably mean disaster for regional economies
And with its back against the wall, will Asia’s biggest, most influential economy use a sharp currency devaluation as a form of retaliation?
In Southeast Asia, home to some of the world’s most China-dependent economies, astute market watchers say they are as clueless as the man on the street when it comes to these two questions.
But one thing is certain, they say: in the financial markets, bearish “animal spirits” have taken hold – many fear the worst if the US president follows through with plans announced this week to raise tariffs on US$200 billion of Chinese products from 10 per cent to 25 per cent in September. China late on Friday reacted with tariffs on some US$60 billion of goods.
