This week’s update on China US trade war

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US president Donald Trump declared his trade actions against Beijing in March and Beijing has been forced to take a more restrained approach as Xi Jinping’s government knows its own vulnerabilities of an economy far from strong.

Starting on August 23, Chinese products will face 25 per cent duties going into the US border, with Trump’s warning he is prepared to raise the amount to all US$500 billion imports from China.

Beijing’s threatening of retaliatory tariffs from 5 to 25 percent on US$60 billion or more in US goods shows totally no confidence of Beijing in winning in spite of the repeated rhetoric of its state media.

Washington has come out of pressure from some voters feeling the pain of trade disruptions with much stronger economic growth reporting at 4.1% last month while China’s reported growth of 6.6% was actually no more than 4.5%.

China’s authoritarian government has to prepare to enter a long term battle with the strong Trump administration when this trade war might go on for years, not months, and be extended to currency, space military, and more areas far beyond bilateral trade.

The trade war is really rattling China’s leadership, as the New York Times report has put it, and the reason, the vulnerable Communist Party needs growth to justify its monopoly on power and is obsessed with preventing social instability.

Globally, the China US trade war is spilling over into more areas of uncertainty not necessarily all for worse as many critics have claimed. Industries for TVs or boat manufacturing might suffer in the short run with the driven up costs; restaurants are seeing benefits from the tariffs increase, as a report has indicated in Business Insider.

According to another report by South China Morning Post, Brazilian soybean exports to China rose to nearly 36 million tonnes in the first half of this year, up 6 per cent year on year. In July, they surged 46 per cent from the same month a year earlier to 10.2 million tonnes.

The Trump administration is not targeting only “Made in China 2025” or rewriting WTO rules, it has been well prepared for another cold war with the communist world. Signing the defense bill to boost a space military is just another step forward.

“A future economic cold war between the U.S. and China may push American leaders to favor a pro-growth policy at any price, even if that risks stoking additional inflation and inflating economic bubbles. If China invests more in space exploration, that could kick off another space race. In whatever realm China decides to emphasize, the U.S. will be afraid to let it get too far ahead.” A Bloomberg report by Conor Sen said these words.

Staff Editor

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