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We might be at the start of a decades-long trade war between China and the US.
Alibaba's Jack Ma has warned that the ongoing US-China trade war could last at least 20 years. As we'll see, it's actually more like 30 - up to 2049, the 100th anniversary of the foundation of the People's Republic of China (PRC).
Steve Bannon always boasted that President Trump was bound to conduct a "sophisticated form of economic warfare" to confront China.
The logic underpinning the warfare is that if you squeeze the Chinese economy hard enough Beijing will submit and "play by the rules."
The Trump administration plan - which is, in fact, trade deficit hawk Peter Navarro's plan - has three basic targets:
- Displace China from the heart of global supply chains.
- Force companies to source elsewhere in the Global South all the components necessary for manufacturing their products.
- Force multinational corporations to stop doing business in China.
The overarching concept is that unending confrontation with China is bound to scare companies/investors away.
There's no evidence South Korean or German conglomerates, for instance, would withdraw from the vast Chinese market and/or production facilities.
And even if the Flight Away from China actually happened, arguably the American economy would suffer as much, if not more, than China's.
The latest US tariff volley may lower China's GDP by only 0.9 percentage points, according to Bloomberg Economics. But China may still grow a healthy 6.3% in 2019.
Comment: While there is something to be said for diplomacy, in our world of stage managed politics the opportunity to read Trumps thoughts in real-time provides more insight into the machinations of international relations than mainstream propaganda outlets ever could:
- US using false accusations on trade war to "intimidate" countries - China
- Germany mulls over the "absolutely ridiculous" option of expensive and unreliable US gas
- Demented US foreign policy pushes Germany into mutually beneficial deals with China and Russia
- Germany needs to invest in Europe and have good relations with Russia, US President destroying the American world order says former German Foreign Minister
- Trump is done: The coup is complete
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