Weak Global Economic Data Disappoints Markets as Tensions Rise Between China and Japan
China’s Ministry of Commerce said Wednesday that Japan's "purchase" of China's Diaoyu Islands was illegal and would sure impact and jeopardize the normal development of economic and trade relations between the two countries. Protests against Japan's "purchase" of the islands have spread across China over the past few days and many Japanese enterprises have suspended production. The incident has also encouraged Chinese people to stage protests and boycott Japanese goods. China’s manufacturing PMI inched up but still pointed to a contraction this month, reinforcing market expectations that the world’s second-largest economy is on track to slow further in the third quarter, while Japan's exports fell the most in six months in July. U.S. manufacturing closed out its weakest quarter in three years in September. - The United States filed a request for consultations with the World Trade Organization's Dispute Settlement Body on Monday concerning China's subsidies to its automobile and automobile-part exporters, while China filed a complaint against the United States about its breach of the WTO rules in its amendment to the Tariff Act of 1930 (GPX bill). Some analysts said the sudden charge brought by the United States was closely related to Barack Obama's undergoing re-election campaigns in powerhouses of auto industry such as Ohio, Michigan and the entire mid-western region, which are crucial to his re-election. To draw the swing voters of those regions, the U.S. administration took the opportunity to put China on WTO "trial". But other analysts held different opinions, saying the trade frictions between the two countries were byproducts of ever growing U.S.-China trade relations. The U.S. congress had been imposing pressure on China over the country's most-favored-nation-treatment on a yearly basis before China joined the WTO. And such pressure has never been reduced since China's accession to the WTO. So far China has not responded to the U.S.'s request for consultations.