The reactions in China toward the tariff war tells a lot about the nature of those groups more than an accurate analysis of U.S.. Some appeasement group mostly from those worshipping West attack Xi for deviating from Deng’s policy of hiding one’s strength and low profile. As if attracting Trump’s ire is the cause of trade war, and be sub-servient will appease him. I have stated earlier that the reason U.S. has avoided opening trade war and economic and political fronts against China was because Bin Laden did China a big favor by distracting West with terror war. The neocons were ready to open up on China when the spy plane incident happened in April 2001, 9/11 gave China 15 extra years to prepare for this eventuality, and China 2025 is very much needed to face the coming Iran sanctions directed at China. ZTE is a warning shot all should be aware of.
Of course if Hillary was elected she would be much more subtle than the boorish Trump, yet this is a blessing in disguise as Trump will blunder on alienating other Western allies while puffing on about his triumphs. This still leave open the question how do China respond to Trump’s tariff war? I suggest the following:
1. Anticipating Trump’s buffoonery of doubling down when losing, thus when 50 billion doesn’t work, try 200 billion or eventually all 500 billion on tariffs. Notice if when tariff goes on all China’s exports to U.S., it will include all those I phones and other U.S. manufacturers which accounted more than 1/2 of the total, so it would hurt U.S. more in reality.. But be prepared for some shifts of investments to other Southeast Asia countries by stimulating local consumption.
2. Obvious Tic for Tac will not work for 3-1 disparity on total import versus export, but China has already creatively do variations from 5 to 25% depending the needs and opportunities. I suggest financially punish Wall Streets by limiting financial investments, impose added taxes on U.S. films shown in China, say 1 Yuan extra per ticket sold. It has added value for limiting U.S. cultural influences.
3. Accelerating on China 2025 on using Chinese semi-conductor products in state purchasing decisions even if costing more. Expanding investment in software development. If Iran sanctions do in fact be imposed on China, be prepared to weather it by whatever means.
4. Foreign exchange of U.S. Treasury bonds be gradually reduced from 2 trillion to around 500 billion as it expires while the dollar is strong and yuan is weak. There is no real reason to hold that much dollars. The extra money can be used for purchasing resources around the world and or used for large scale water diversion project of South to North, from Himalayans to Xinjiang.
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Allen says
Obviously the tariffs are bad news to Chinese companies and workers. They are also bad news to American companies and consumers. But politics being what it is, tariffs that hurt China is considered a win for the U.S. here in the U.S.
Be that as it may, I personally “welcome” Trump’s trade war. Just as China used WTO to propel itself forward despite the agreement embodying a lot of Western values and interests (for example, Western notions of patents and copyright and specifics of the terms (i.e. whether China is a “market economy”, the lack of regulation on various export restrictions by West on others, the use of Western financial and technological dominance to conduct economic warfare, etc.), so can China use U.S. tariffs to propel itself one step forward its vision of being a moderately prosperous nation.
A few notes from the tariffs (as well as all frenzy over “foreign meddling” here in the U.S.)…
China should use the tariffs as further incentive to realize its “Made in China 2025” plan. The more Trump applies its tariffs, the more incentives China has to realize it.
It must strengthen its Internet ecosystem so its basic social communication platform is not manipulated by foreign powers.
Of course, that is the strategy. Getting there will be a battle. But I have faith that the China nation, Chinese people, can get there. Where there is a will, there is a way. When that applies to 1.6 billion people, that will can move mountains.
Charles Liu says
Well Trump is running out of stuff to impose tariff. The latest round included bull semen (where US is %1 exporter and China exports virtually none)
https://www.bloomberg.com/news/articles/2018-07-11/you-have-a-month-to-comment-on-bull-semen-vegetable-hair-tariff
alanking says
Very good post, agree completely!
N.M.Cheung says
@alanking
With Manafort verdict and Cohen guilty plead today, Trump presidency is teetering and will try to distract the country, but with Korea not on short term radar, Iran sanction with the 6 month delay after withdrawal, China tariff will be the whipping target as August tariff hearing winds down. Expect the $200 billion, 25% come on ahead of schedule.
Face The Fact says
Glad to see other persons being aware of those fawning over the west and doing harm to China.
Either they are “useful idiots” being naive and believe that anything coming from the west is good OR lackeys of the west being paid/rewarded for doing their bidding – to do anything that can be used to harm China.
Chinese government must not be lenient when dealing with the west and its ilk. Those harming China’s interest don’t have any rights having any position in the government.