SINGAPORE (June 3): The trade war needs to fire its PR team. The tussle between the US and China is being blamed for all manner of economic and financial developments. Some of these are only vaguely related to the tariff spat, or they reflect trends underway before US President Donald Trump ever heard of his Chinese counterpart Xi Jinping. In other areas, like monetary policy, the conflict alters timing, not outcomes.

The latest demon is the prospect of a recession, which was said to be responsible for sliding stocks and diving bond yields on May 29. The culprit? You guessed it: the trade war. But handicapping a recession has been a favourite game of market commentary every few months for the past two years. The US’ expansion is almost 10 years old; it is long in the tooth, tariffs or not.

China’s economy was already in a long-term slowdown, exacerbated by a crackdown on debt that has been driven by domestic policy choices, not the White House. The country is shifting to an economic model less dependent on exports and cheap low-end manufacturing. By 2016, incomes in China had already reached the level where Japan, South Korea and Taiwan started shifting production abroad decades earlier, according to an International Monetary Fund report.

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