Trump's Infuriation Worsens US-China Tensions

On Tuesday (5/12), U.S. President Donald Trump declared his reluctance to negotiate the continuation on the trade deal with China. His choice of action was caused after China's ruling Communist Party official newspaper, The Global Times, reported that some government advisers in Beijing planned to possibly invalidate the agreement and formulate a new deal to bend the scales more to the Chinese side on Monday (5/11). Trump solidifies his will as mentioned in his affirmation to Reuters, stating, "No, not at all. Not even a little bit," when asked if he would contemplate reworking the Phase 1 trade deal. Furthermore, he adds that "I'm not interested. We signed a deal. I had heard that too. They'd like to reopen the trade talk, to make it a better deal for them". Hours after the report was issued, Chinese importers bought at least 240,000 tons of U.S. soybeans on Monday for shipment beginning in July. Moreover, China has released the new list on tariff exemption, 79 items including medical disinfectants, rare-earth ore, silver and gold ore concentrate, nickel, and aluminium alloy products. This expands the amount of 65 U.S. goods that got the tariff exemption on 28th of February. Trump also considered withdrawing from the pact signed in January. Under the Phase 1 deal, Beijing pledged to buy at least $200 billion in additional U.S. goods and services over two years while Washington agreed to roll back tariffs in stages on Chinese goods. Despite this, the recent us-china tension over the coronavirus outbreak threatens the discussion for phase 2. It is worsened by Trump's allegation that there was evidence the new coronavirus came from a Wuhan laboratory and reports that the administration is planning to issue a warning that computer hackers tied to the Chinese government are attempting to steal information from U.S. researchers. Furthermore, Senator Lindsey Graham, a close ally of President Donald Trump, would authorize the U.S. president to impose far-reaching sanctions on China if it fails to give a full account of events leading to the outbreak of the novel coronavirus. This ongoing tension between the U.S. and China, along with the spreading rumors regarding the possibility of the second coming of a similar virus, has decreased the Jakarta Composite Index. By Tuesday, 12 May 2020, JCI opened, then corrected 0.12% to 4,633.49, and up to 09:16 WIB, JCI was corrected by 0.3% to 4,625.23. One major factor is how uninterested Trump is in ending the negotiations with China, affecting investor's sentiments to pull away and causing Indonesian stocks to worsen. One party heavily affected is Bank Rakyat Indonesia Tbk (BBRI). Their shares were sold net to foreigners of a total Rp 32 billion, which resulted in a 1.53% correction to the price level of 2580. Similar decreases also occurred in the majority of other Asian exchanges such as Hong Kong's Hang Seng Index, which decreased by 1.49%, Singapore's STI correction by 1.93%, while Japan's Nikkei decreased by 0.08%.

Sources:

Reuters

CNBC Indonesia

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