Uncertainty over US-China trade deal between Donald Trump and Xi Jinping at G20 fuels global recession fears

It is hoped the two leaders will meet in Japan later this month to at least stop tariffs on a further US$300 billion of Chinese imports

Global rating agency Moody’s believes there is a 45 per cent chance of a no deal scenario between the world’s two largest economies

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World leaders, including China’s President Xi Jinping and US President Donald Trump, at last year’s G20 summit in Argentina. Photo: AP

Published: 10:00pm, 11 Jun 2019Updated: 9:20am, 12 Jun 2019

Almost a year into the US-China trade war, Billy Wang, who runs a trading business in Shanghai, has grown increasingly resigned that the end of the dispute is nowhere in sight and will continue to chip away at his earnings.

The businessman, who supplies electronics parts like flash integrated circuits to exporters, believes it will be at least another six months before any deal will be struck between the world’s two largest economies.

“Some of our clients’ products are headed for the US, so for us, the volume of orders related to the US market has shrunk by more than half,” Wang said. “Short-term, I’m not optimistic. The fight between US and China is very intense.”

Bleak sentiments like those harboured by Wang are spreading as the fallout from the trade war penetrates deeper into global industrial value chains, clouding their growth prospects for 2019. While economists may be able to quantify the economic effects on direct trade channels, the bigger fear is the growing negative impact on global growth from a deterioration of consumer and business confidence as well as investor sentiment.

The severity of the economic impact hinges on whether US President Donald Trump and Chinese President Xi Jinping can reach some sort of agreement at their expected meeting at the G20 leaders summit in Osaka, Japan at the end of June that would see the United States delay or halt plans to place tariffs on yet more Chinese imports, analysts said.

On Monday, Trump renewed his threat to impose additional tariffs on Chinese goods if there is no progress in talks with Xi, or if his Chinese counterpart refuses to meet at the G20, according to an interview with CNBC. Trump has repeatedly said he expects to meet Xi in Osaka, but Beijing has not confirmed any such meeting.

In the CNBC interview, Trump said “the China deal’s going to work out” because China was being “absolutely decimated” by companies leaving to escape the US tariffs.