Reuters
Zero Hedge: How Will China Handle The Trade War Now?
Now that trade war with China has escalated substantially yet again following a weekend in which both the US and China hiked the tariff rate on billions of imports, Deutsche Bank is revisiting how China's stance towards the trade war has evolved over the past 1½ years, and how it may change in the future.
As a reminder, while China first sought to prevent a trade war, and then tried to quickly reach a trade deal with the US, DB economist Yi Xiong notes that China's strategy has changed again since early May, and he describes China's current strategy as "endurance": the main goal is to preserve China's economic resilience, while taking the higher US tariffs as a given fact.
The premise for China's new strategy is two-fold:
* frictions between the US and China have gone far beyond trade, reducing China's potential gains in a trade deal; and
* damage from the higher US tariffs to China's economy has been manageable.
Read more ....
WNU Editor: I concur with the above analysis that China's current trade war strategy is to continue trade talks, respond to US tariffs but with smaller and targeted measures, and to accelerate its opening up to other countries. The problem with this strategy is that China is dependent on open U.S. markets for its export growth, it's leverage on U.S. imports is limited, and opening trade relations with other countries that have trade barriers even more stringent that the Chinese is going to be difficult. Bottom line .... the Chinese need the U.S. market for its products, trade surpluses, U.S. investments and technologies, and more importantly a stable political relationship. This is now all at risk, and the consequences will be a lowering of economic expectations within China itself.
4 comments:
- 1997 vacationed in China.
- GDP growth was 9.321% per World Bank.
- GDP growth has always been above 5% since 1990, if that tells you anything.
- Spouse told me that China was in an economic downturn, people were hurting, and not to appear to boisterous.
- Obviously, I wish China well, but not at the expense of economically raping my children with currency devaluations, IP theft, and other blasphemy.
- If every country in the world mandated that every subsidiary of a multinational be 51% owned by locals, I would be good with it. It would be a level playing field IMO and there would not be 'imperialism'. I know of a dew countries which mandate it and I have been good with the idea for a long time.
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=CN
Hong Kong civil society is a beneficiary of Trump's obdurate stance against China. Today the kidnapping law was withdrawn by Carrie Lam, a major concession by Beijing.
Go back to Obama's age, imagine HK in the same situation. What would Obama do? He'd be intimidated by Beijing and do nothing to threaten China over HK. As Gen. Mattis says in his new book, he said Obama was a coward and if he knew it, so did Putin, Xi, Kim and many others.
When you are reduced to that low level of response, you are less than nothing.
Just calling a spade a spade. It must really suck to be you Bob.
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