The Year of the Golden Pig has begun with the ostensible reckoning of the U.S. – China trade wars. Apple shocked its investors by releasing a gloomy sales forecast in China. Apple’s CEO, Tim Cook, said that “while we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China.” This bad news precipitated a flash clash of the Australian dollar.
Obviously, trade conflicts are only part of the reasons behind Apple’s declining sales in China. The Chinese economy has recently been in a downturn, and Apple has been facing fierce competition in the Chinese market. Nonetheless, this is a strong demonstration that national economies are intertwined, perhaps more than we could fathom. This bad news at the inception of the New Year must send stern warnings to both politicians and businesspeople. Could this sign pressure both American and Chinese trade negotiators into sealing a deal before the March deadline? Are there any roles to play for multilateral organizations, such as G20 and WTO, in defusing trade tensions in the face of yet another global recession, which seems increasingly possible? Incidentally, central banks (both in the United States and Europe) are likely to squeeze monetary supplies in varying degrees.
