China's President Xi Jinping addresses a media conference with South African President Cyril Ramaphosa in Pretoria, South Africa, July 24, 2018. REUTERS/Mike Hutchings
Reuters: Handling of U.S. trade dispute causes rift in Chinese leadership: sources
BEIJING (Reuters) - A growing trade war with the United States is causing rifts within China’s Communist Party, with some critics saying that an overly nationalistic Chinese stance may have hardened the U.S. position, according to four sources close to the government.
President Xi Jinping still has a firm grip on power, but an unusual surge of criticism about economic policy and how the government has handled the trade war has revealed rare cracks in the ruling Communist Party.
A backlash is being felt at the highest levels of the government, possibly hitting a close aide to Xi, his ideology chief and strategist Wang Huning, according to two sources familiar with discussions in leadership circles.
A prominent and influential academic whose views have found favor in some party quarters has also come under attack for his strident views on Chinese power.
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WNU Editor: I know among my own Chinese contacts they are concerned on what Beijing is doing. They do not see how the end game in the current trade war against the U.S. can benefit them.
5 comments:
China's alternative to the US market is which basket of countries? I'd say the EU is the only candidate and they are a scared of Chinese economic domination as the US. So they won't play ball.
China is borrowing, building, militarizing as if the US gravy train ends only when the Chinese say so, some years deep into the 2020's. Trump stopped it too early and now should the US trade surplus disappear or drop substantially China will have all these debts and commitments with no trade surplus's to support it. Hard landing.
Let's back up for a moment; I think if the US can eliminate 25-50% of the trade imbalance, great!! US is an import nation so 25% represents a very large improvement, 50% represent a coup against the Chinese. So, once the Chinese decide to treat the US as an equitable partner should the US negotiate.
I agree with your contacts. There simply seems no way that this ends well for China. I haven't checked the markets today but the US markets seem unaffected in any major way. As for the Chinese markets, from what I do know, they seem to be suffering. Perhaps I am mistaken.
Wall Street has a track record of 100+ years of properly getting stuff like this right. They don't seem to think the US is going to be adversely affected. As for the pundits who breathlessly and hysterically criticize Trump's trade policies, they not only do not have a track record as impressive as Wall Street but their record is quite the opposite. So do we trust the judgment of Wall Street and Trump who has decades of some successful and some not so successful deal making or those with no experience at such maters combined with a woefully bad track record with streaks of proven dishonesty? Experiential common sense would suggest we should trust Wall Street and Trump over these people any day of the week.
The US/China trade relations is a bit like the following analogy. I know of two people who were in the oil industry in the Houston area where I live when the price of oil was in excess of $100 per barrel. One of them is still in this industry.
Person 1: She knew this situation could NOT continue indefinitely. She made enormous profits at the price of $100+ per barrel. She saved money, pocketed the profits, invested them, and whenever the inevitable correction occurred she was in good shape. Suffice it to say now she only works pretty when she feels like.
Person 2: When the price was at this level, he spent, borrowed, spent, and borrowed some more as though this situation was going to last forever. When the inevitable correction occurred, he was essentially ruined financially and last I heard barely making a living.
The Chinese/US trade situation is a bit like this scenario of $100+ per barrel oil to the benefit of China. Experiential common sense tells us that would not last forever. Eventually it would have to change or the USA is in the poor house. Surely Chinese leaders must have known this.
Mr. Feldhake's analogy is essentially spot on. There is a level of imports from China at which China can be very profitable but that is sustainable and beneficial to the US. To carry the oil analogy a bit further, at $65-$75 per barrel, the producers can make a reasonable return and the consumers can purchase at a reasonable price. The same applies to US/China trade relations. This is what POTUS is trying to do. I wonder if anticipated China would adopt such an unreasonable position.
I will say if they staked their financial future on an unsustainable position (person 2 above) extending them sympathy is going to be problematic at best. If they were like person 1, they would have known this situation could not be sustained, they would have pocketed their profits, invested them, and been ready when the inevitable change did occur. In fact, she alluded to me many times that she knew the high price would not be sustainable and was prepared when the change did occur.
Perhaps the Chinese knew but did not want to know therefore they didn't know and were caught unprepared when the change did occur. The other possibility is they hoped to put America into the proverbial poor house before we realized we were being fleeced. I've actually known about this problem for a long time. I'm pleased we have a finally have a POTUS who gets this and is attempting to address the problem.
I would enjoy some of the folks like Krugman putting in their comments. Just for laughs. That's all he's worth considering his past verbal track record.
Bernanke and Greenspan with their comments on their inability to recognize bubbles would be fun also.
These are people who fail the soup test. What's that? If soup was raining from the sky would they walk out their door with a spoon in their hand or a knife?
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