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Pressure on China to Give In Grows


We could know soon whether Trump’s trade war against China has been worth it. Beijing has increasingly good reason to give way, since there are signs that the Chinese economy is starting to implode. GDP was recently reported at 6.2%, the slowest pace since 1992, and consumers have been hit hard by the devaluation of the yuan. Cheapening the currency may have kept exports from collapsing, but it has also made imported goods more expensive, causing a corresponding fall in the standard of living.

If China buckles, it would validate Trump’s initial, tactical assessment that the U.S. was in better shape to weather a trade war. That seems to be true so far, but if just a little more tit-for-tat were to topple the global economy from its pins, the victory will have been Pyrrhic.  While America’s economy is outwardly strong, inflated prices for stocks and real estate have made it extremely vulnerable to a downturn. Europe’s ongoing shrinkage could prove to be the catalyst, since it is occurring with interest rates at or below zero. The failure of the euro-zone to reverse this trend is certain to dampen Wall Street’s exuberance whenever the Fed hints of easing. This is a hazard that undoubtedly has begun to affect investor psychology, and its potential to kill the bull market once and for all should not be underestimated

‘Greatest Theft in History’

In the meantime, unqualified support for free trade has been remarkably on the wane, even in so strong a redoubt as The Wall Street Journal. Like the rest of us, the newspaper’s editors seem to have tired of China’s sleazy business practices. An op-ed piece on Monday cited China’s “aggressive exploitation of the global trading system that amounts to stealing from other economies.”  Still more remarkable was tacit op-ed support for Mr. Trump as he digs in his heels: “[The President] wasn’t far off when he called it ‘the greatest theft in the history of the world.’ ” Tariffs, it would seem, are enjoying a patriotic revival.

3 comments… add one
John Jay August 13, 2019, 9:57 am

Nice spike on China saying “We will be talking on the phone in a couple of weeks.”
I wonder how many CL, NQ, etc. contracts Xi puts on just before those announcements!
He’ll never settle, just make vague comments!

Ben August 13, 2019, 1:38 am

I wonder if this bit of widely unreported-due-to-TDS news has anything to do with what’s going on in Hong Kong right now? Looking like Ukraine 2014, over there!

Anyway, if this is any indication of China’s economic health, most of what I’ve bought over the last five years has been Made in USA: Clothes, shoes, wallets, purses, tools, hardware, machetes, bike seats, computer desks, firearms, rock tumblers, 3d printers (yes!)…

And when I can’t find it Made in USA, I can usually find it Made in UK, Germany, Italy, Poland, Peru, Taiwan.

How do you like that last one, CCP?

…And all you who say, “Look, we need to trade with China”?

…And those who would play the “You realize that YOU pay the tariff, don’t you?” card?

It’s hard to pay the Big, Bad Tariff when you don’t buy Made in Big Bad Snatch Up Hong Kong Land!

Pan August 12, 2019, 9:13 pm

It’s like two kids in a play ground, beating the crap out of each other, not wanting to give in to their egos because their friends are watching.
Then, when they the school bell rings and they “have to” stop, one guy says to his friends, “yeah I know my face is pretty messed up, but at least it’s not as bloody as his” . … . … hey great result !!!

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