This article was originally published on ETFTrends.com.
The U.S.-China trade impasse could put Taiwan into the forefront, according to Zhiqun Zhu, a professor of political science and international relations at Bucknell University. Zhu said Taiwan could be used as a major "chess piece" for the U.S. in ongoing trade negotiations, which could put the iShares MSCI Taiwan ETF (EWT) in play.
“Taiwan’s value to the U.S. will only increase as tensions between the U.S. and China escalate,” Zhu told CNBC.
While Chinese President Xi Jinping supports the notion that China and Taiwan must stand together unified, the U.S., on the other hand, supports the country's efforts to stay independent. Chinese officials, however, have openly stated that military force is an option in order to maintain unity between the two nations.
“If anyone wants to separate Taiwan from the country, the Chinese military will resolutely defend the unity of our motherland at all costs,” said Chinese Lieutenant General Shao Yuanming.
China can certainly play the long game in trade negotiations as the trade impasse with the United States didn't seem to affect it in May as the country's overall trade surplus was about $42 billion--double the $20.5 billion expected by economists polled by Reuters. The data comes just as the International Monetary Fund (IMF) lowered the growth expectations for China through the rest of the year.
The IMF projected a growth forecast of 6.3 percent, lowering their initial expected growth rate of 6.2 percent. They're expecting that to slow further in 2020 to 6 percent and even lower to 5.5 percent by the year 2024.
Trade Wars Pose Global Risk
If you want someone to paint a rosy picture of the global economy, you might not want to ask French Finance and Economy Minister Bruno Le Maire. At the G-20 Finance Ministers Meeting in Fukuoka, Japan, Le Maire cited the escalation of a U.S.-China trade war as the prime culprit.
“We do not have the growth figures we should have because of the trade tensions between the U.S. and China,” Le Marie said.
“I want to be very clear, a trade war would mean an economic crisis all over the world, and especially in Europe,” he told CNBC’s Nancy Hungerford.
Le Maire further opined that trade war issues should be kept isolated from topics such as technology. The topic of intellectual property on areas like technology has been an ongoing topic of contention for both the U.S. and China in trying to get a trade deal done.
“We need to make a clear difference between ... sovereignty, key technologies on the one side, and trade on the other side,” Le Maire said.
“Trade tariffs do not have anything to do with the technologies. We want to have a fair trade,” he added. “We want to build a trade that will be more efficient that will feed growth in the future and for that we have to avoid hitting countries with new tariffs and entering into a trade war.”
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