How Would China Respond To A Trade War Against The U.S.

CNBC: China likely to restrict access to market, disrupt supply chains in a trade war: Economist

China is unlikely to take trade diktats from President-elect Donald Trump and instead use ample tools from multilateral trade rules to financial resources to fight back, a leading economist said.

"We will see some sort of action and the risk is that even small actions—given that the China may push back very hard—could very quickly escalate into a tit-for-tat battle that erupts into a trade war," Cornell University economist Eswar Prasad told CNBC.

Already a verbal sparring war has carried on in the transition to Trump's inauguration on Jan. 20.

This week, Trump's pick of Robert Lighthizer, an official in the Reagan administration and harsh critic of China's trade practices, to be his chief trade negotiator, also caught Beijing's official notice in standard diplomatic language at a daily briefing in Beijing by the foreign ministry spokesman.

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WNU Editor: China has a lot of options that can disrupt the U.S. economy in the event of a trade war. But .... China has far more to lose in such a trade war .... starting with its $500 billion trade advantage with the U.S.. China will have to compromise .... they will need to stop manipulating their currency and eliminate many of the restrictions that has kept out international competitors from entering their markets .... even if it would mean a slowdown and/or decrease in their trade surpluses. Failure to do so will unleash international political and economic forces that they do not have any control over .... and if the Chinese economy slows down as a result (which it will), the political and social repercussions in China will be widespread and it will result in a direct threat to the power base of the Communist Party in Beijing itself. What's my prediction .... China has a lot of pride .... they will tell Washington to stuff it, and Washington will respond. After that ....  we shall see what happens but the biggest opposition to such a a trade war will be within the U.S. itself .... starting with Congress and the business elite who have vested a lot in maintaining the current status quo.

Update: As predicted .... the Chinese are now issuing their threats .... China Threatens Trump With "Big Sticks" If He Wages A Trade War (Zero Hedge). More here .... Chinese Media Say ‘Big Sticks’ Await Trump If He Seeks Trade War (Bloomberg).

Update #2: Donald Trump could use drop in Chinese yuan against US dollar to declare trade war: economists (ABC News Online).

Update #3: The U.S. is not the only country that is now hitting back at China .... China hits back at 'extreme' tariffs from rival economies (The Guardian).