Market Round Up: USA 1, China 0 – Bitcoin coffee bitte – Pound wobbles
1. USA 1, China 0
Word on the street, actually economists, has it that China can not win the trade war against the U.S.
The view is that President Xi Jinping’s ‘Made in China 2025’ transition drive from high speed growth to high quality growth is not sustainable as its economy show signs of slowing down and, importantly, its population demographics lean towards a growing, aspiring middle income nation. What this means is that the huge reserve of low income (labour costs) that makes Chinese products so competitive, is whittling away. The result? Manufacturers move to the next low income markets – currently India, Indonesia and Vietnam, thus placing further pressure on the country’s growth. Added to this, China is still struggling to develop a strong domestic consumer market that can accommodate its growing manufacturing capacity.
The fact is history has shown before that the country with a trade surplus (China) is often hit harder and is therefore more likely to be driven to find a compromise in its dispute with its competitors. As Zhao Changmao, former deputy head of the Central Party School, said to the Sunday Times: “China only has two options: Give into America’s bullying, or let the other side know that Chinese people are not easily pushed around. This trade war is different. It’s a strategic game concerning the country’s fate”.
2. Bitter Bitcoin coffee, bitte
Cryptocurrencies, namely Bitcoin, are finally becoming a generally accepted form of payment for goods and services.
For quite some time, the more obscure retail outlets have been the vanguard in accepting Bitcoin – one of the first was Overstock, the discounted big-ticket merchant, when it partnered with Coinbase to allow people to buy goods using Bitcoin. But trust is growing. Rumour has it that Starbucks will be the first major high street retailer to accept Bitcoin in the not to distant future. There are many who already do: Subway, Expedia, KFC in Canada, Playboy and electronic retailer Newegg. Meanwhile, more and more ATM cash machines are facilitating the buying of cryptocurrencies. So how long before it becomes a traditional ‘fiat’ currency? Leave that to the next generation!
Related: Cryptocurrency – A Beginners Guide
3. Sterling pounded
The British Pound (GBP) is not having a good time right now, falling to its lowest point in nearly a year. At one point it was down as low as $1.29, and against the overall dollar basket the gap is yawning.
Most of this can be attributed to fears that the UK will crash out of the EU with no Brexit deal. However, most sensible punters attribute this to politicians hysteria-mongering and summer slow-news. Unfortunately, this current bearish trend is expected to continue as Parliament is in recess till September and uncertainties will continue to be bandied around until then.
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