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The decision of the People's Bank of China not to intervene Monday in the changes to end the fall of the yuan marked a new stage in the escalation of economic hostilities between the United States and China. Stock markets have reacted to the most severe falls of the year and the Trump administration has accused the Beijing government of "currency manipulator", an imputation that forces the International Monetary Fund to give preferential attention to the fluctuations of the Chinese currency. Beijing has announced the suspension of purchases of US agricultural products. Finally, the Chinese monetary authorities intervened again to put an end to the fall of the currency and, after mutual appeals for a negotiated solution, the candidates returned to a state of calm and calm which, nevertheless, , is not auspicious.
The episode on Monday shows that the negotiation between Beijing and Washington is not only stagnant, as evidenced by the lack of agreement at the last meeting in Shanghai, but that she is unlikely to find new short-term channels; It reveals that a trade war can easily become a currency or debt war and that China has a greater retaliatory capacity than that alleged by the Trump government. Beijing and Washington are willing to threaten the use of all available economic weapons, as it is a fundamental conflict for economic hegemony, whose main objective is dominating the technology markets.
However, the effects of this economic cold war are hurting third parties as much or more than the competitors themselves. Some badyzes rightly point out that Trump can not overcome the threats, since a serious and persistent convulsion on Wall Street or a sharp decline in the income of the agricultural sector would hurt his electoral interests. Or that China should modulate its responses, because a depreciation of the yuan favors exports, but increases the risk of inflation, makes imports more expensive and causes capital outflows. Thus, with the approach of the elections, Trump can gradually turn to a well-intentioned negotiation, which is by the way the only way out of this narrow alley of threats to the world's balance.
But while this is happening, Europe is at the crossroads of hostilities whose consequences complicate its delicate economic situation. The European economy has entered a deceleration phase. In some cases, the debt is repaid with negative interest and the euro may record depreciations going beyond what is appropriate. The ECB will approve new measures of monetary flexibility because of the chaotic effects of hostilities between China and the United States or the hieroglyph of Brexit, also encouraged by Trump, and when that happens, it is likely that the US president will resume the speech that "Europe manipulates currencies".
The question is whether the EU has an organized strategy to deal with a long-standing and potentially devastating conflict for the euro economy. It is to be feared that the answer is negative. If you do not build this common response quickly, if you do not take steps to stimulate the economy and maintain the currency and monetary balances, the European economies will be the main victims of the global disorder.
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