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Can you have both fish and bear's paws? Over the past 20 years, trade expansion has driven rapid growth in the global economy. But with trade shrinking at a rate of more than 1 per cent a year and the two-year trade war between China and the United States coming to an end, the organisation for economic cooperation and development (OECD) expects global economic growth to fall to a 10-year low next year.
Beijing has reportedly invited senior U.S. negotiators to enter into negotiations as the U.S. deadline for imposing tariffs on Chinese exports to the United States approaches December 15. But if U.S. President trump signs a bill to support Hong Kong protesters, or if U.S. warships continue to sail near China's claimed South China island, China may also cancel the talks.
China's economic growth has slowed to its slowest in 30 years. Orders and shipments at new US factories have slowed, and monthly job creation is a quarter below last year's levels, even though the Federal Reserve has cut interest rates three times.
The U.S. Treasury yield curve flattened again, sending a negative signal. The 10-year bond yield is only 15 basis points higher than the two-year yield; just a few months ago, the curve was upside down. The continued reversal of the yield curve is a reliable indicator of a recession, which is likely to be driven by increased trade tensions.
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