Donald Trump terminates relationship with WHO, announces actions against China

The European economy could become even more vulnerable if the Donald Trump administration nevertheless imposes investment restrictions against China, analysts at CNBC say.

Several news agencies recently reported that the White House is considering limiting investment ties between the world’s two largest economies.

The options under consideration involved the withdrawal of Chinese shares from American exchanges and the limitation of investments of state pension funds in the Chinese market..

Chinese Foreign Ministry spokesman Greg Shuang told reporters that any delisting steps would harm the interests of Chinese and American companies and create unrest in the financial markets, jeopardizing global trade and economic growth..

«If these threats come true, the yuan could fall further», – said Konstantin Fraser, European political scientist from the TS Lombard research group.

«This means a decrease in demand from China and the rest of the world, as well as great damage to the European economy, which is highly dependent on exports.», – he noted.

Clet Willems, former senior White House trade official who served as deputy director of the National Economic Council, said that reducing cash flow between Washington and Beijing is an idea worth considering.

Europe fears Trump's actions against China

However, he cautioned that such a move could backfire if not properly implemented..

Agatha Demarais, Director of Global Forecasting at the Economist Intelligence Unit (EIU), assessed the possible implications of the constraints discussed..

«The extraterritorial component of the US sanctions, which means that all companies around the world must end their business relationships with the sanctioned entities if they use the US dollar, means that these steps will sever the links of these banks with their international counterparts. If international banks fail to sever these ties, they in turn could face fines reaching billions US dollars», – said Demares.

White House Economic Adviser Peter Navarro and Senate Majority Leader Mitch McConnell rejected messages on possible restrictions on Chinese investments in the United States.

The US Treasury Assistant Secretary of the Treasury also said the administration has no plans to block Chinese companies from listing on US stock exchanges at this time, while welcoming US investments..

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