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Not long ago, Tokyo and Seoul seemed to be two proud and determined governments. Now, Asia's second - and fourth-largest economies have fallen victim to China's fight against Trump's trade war.  



A trade war between US and China would inflict the worst collateral damage on the economies of Japan and South Korea.The chain effects are just at the beginning, not just in North-East Asia but across the region.
 
Beijing allowed Yuan to fall below the psychologically important level of 7 to the dollar.  It is impossible to ignore the countermeasures against Trump's latest tariff threat.The US government pointed out China is a currency manipulator.
 
If there is any "fake news" in the economic circle, it is the labeling put by US. For the past two and a half years, Beijing has been propping up the renminbi rather than devaluing it to appease the “protectionist commander-in-chief of US".
 
Ironically, Mr Trump has given Beijing a green light to devalue with a clear conscience. A lower exchange rate is key to reviving China's vital export. But it is the last thing that Japan, South Korea and other south-east Asian economies wants.
 
The good news is that, so far, China has not allowed the renminbi to plummet. Beijing wants to avoid panicking the jittery world markets and further escalation imposed by Mr Trump and his anti-china advisers.The bad news is that the "Break 7" signal that the us and China have lost hope of a trade deal is a direct blow to Asian countries.


 
The deteriorating US-China relationship will have a serious negative impact on economic confidence and market sentiment this year. That would make South Korea's already bad economic situation worse. Its exports to China fell 16.3% in July. Youth unemployment is running at 10.5% as growth slows. Japan is in a similar position, with real wages falling for six consecutive months in June. The yen has risen sharply as investors seek refuge in the US-China drama.


 
Trade wars are also hurting global demand. This does not bode well for countries such as Indonesia and Malaysia, which want to use export earnings to pay for government debt and investment in education. 
 
A weaker renminbi, decreases the purchasing power of the Chinese people - from Singapore to Vietnam and Australia's growth, also will weaken the competitiveness of the Vietnam factory, and that Chinese tourists find Thailand tourism destination and the price decline of Singapore shopping area, will also enable the Philippines under more pressure to cut interest rates, and to make Australia iron copper resource has become more expensive for SBC. 
 
Experts say the trade war launched by the United States has dented market confidence and led to a decline in regional vitality.