China Ready To Retaliate If The US Does Not Stop Huawei Suppression

The Chinese foreign ministry was largely expressing their dissatisfaction with the United States. Officials in the country called the action announced by the US as “unreasonable suppression”, the government officials are said to be mounting a list ready to retaliate against Washington.

It comes following our last reported article, Donald Trump and his administration made a move to block global chip supplies to its blacklisted company Huawei Technologies, spurring fears of Chinese retaliation and hammering shares of US producers of chipmaking equipment.

On Saturday, local media outlet China's Global Times reported quoting a source close to the Chinese government saying that Beijing was ready to take a series of countermeasures against the US.

According to the sources, they told the Global Times: "China will take forceful countermeasures to protect its own legitimate rights, if the US moves forward with the plan to change rules and bar essential suppliers of chips, including Taiwan-based TSMC, from selling chips to Huawei”.

Tensions between the world's two largest economies have been increasing in recent weeks, despite the hard-won deal that defused a bitter 18-month trade war. It could very well be abandoned months after it was signed in January.

What does this mean for the market?

It is more uncertainty, markets are going to be forced to further back safe-haven assets. The likes of; USD, JPY and CHF, in addition to Gold, will all continue to remain well-supported. In terms of the market open, gaps may be observed in favour of the safe-haven assets, with riskier FX likely to be hit; AUD, NZD, CAD, GBP, given this threat.



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