US–China trade war – What’s driving the latest escalation

In just a few days, US–China relations have taken a troubling turn. How did we go from the goodwill of the London and Madrid bilaterals to the current war of words, the threats and the counter-threats? Is this simply pre-APEC brinkmanship, or the start of a more fundamental breakdown in relations between Washington and Beijing? And how great are the risks of a miscalculation that spills over into the global economy?  In this special episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing and Head of China Economics Julian Evans-Pritchard discuss the past, present and future of US–China relations. They explore key questions, including: • What’s driving Beijing’s new controls on rare earths, and whether the government could reverse course • What’s wrong with US perceptions of China’s economic health – and why those perceptions could prove dangerous • How the global economy will need to keep adjusting to a fracturing US-China relationship Analysis referenced in this episode The fracturing of the Global Economy US may revive plans to curb financial ties with China Global Economics Outlook: US leads, others lag, in uneven global economy CAP: Economy holding up, but growth remains weak China’s push for innovation is not lifting productivity