Here comes the 30-year trade war with China

Source: Asia Times

Trade tensions between the US and China could drag on for decades but China’s focus on its Belt and Road Initiative could provide relief

We might be at the start of a decades-long trade war between China and the US. Photo: iStock

By Pepe Escobar • September 23, 2018

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:

1. Displace China from the heart of global supply chains.
2. Force companies to source elsewhere in the Global South all the components necessary for manufacturing their products.
3. 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.

This is a decent overview, with numbers, of what the trade war might cost China.

What’s certain is that Beijing, as confirmed by a rash of editorials in Chinese state media, will not just play defense.

Please go to Asia Times to read the entire article by Pepe Escobar.

 

 

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