China F&A Monthly: September 2019
The trade war between the US and China has been escalating to a new level in recent weeks, as both sides threatened to slap higher tariffs on the other's exported goods. Within F&A, China planned to impose additional tariffs of 5% or 10% on US soybeans, corn, wheat, sorghum, pork, beef and other agricultural products, on top of the existing 25% levied. Amid looming trade uncertainties, the risk of a global economic recession has ratcheted higher. China's economic growth weakened to 6.2% in the second quarter, facing further downward pressures. Meanwhile, the Chinese yuan dropped to the lowest level in 11 years. A weaker yuan is a double-edged sword. But in general, it is likely to pose a threat to Chinese F&A sectors, as it raises the cost of imported raw materials, such as soybeans and dairy powders.
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