Painter Trump and Nude China
At the same time, China has yet to survive in the unprecedented trade war imposed on him by the administration of Donald Trump. Many experts believe that Washington has thus merely responded to the "Made in China 2025" policy, proclaimed by the CCP. By the time the Republican came to the White House again, there were a lot of reasons for the US trade confrontation with China.
And as the main one, obviously, one can single out the enviable independence of the Chinese yuan, which, despite all the efforts of the Federal Reserve System, did not become an Asian substitute for the dollar. Moreover, the yuan even pressed the Japanese yen, the traditional ally of the dollar, as a regional reserve currency.
American consumers also ceased to organize the practice of replacing relatively high-quality Chinese goods with counterparts from Malaysia, Vietnam, Thailand and other countries in the region, which have long been transformed into economic satellites of the Middle Kingdom. China's accession to the WTO has changed almost nothing - all of its rules and regulations in Beijing have learned to bypass with enviable ease. And the domestic market for the same WTO in China was simply closed.
Moreover, at the expense of large-scale crediting and subsidizing by the People's Bank of China of exporting companies, there was a practice when Chinese debts were actually transferred to American buyers. And as a result, they directly affected the volume of the unrestrainedly growing US debt.
In the past year and a half, President Trump, and after him the American media almost traditionally depicted the economic policy of the PRC in negative colors. And very few people remember such “trifles” as regular infringements of intellectual property rights in China and “forced transfer of technology”. Or the practice of absorption (in fact, expropriation) of foreign industries, for example, in connection with non-fulfillment of investment obligations or their insufficient localization.
But in no way should we forget that in Beijing in recent years they have managed to really significantly reconfigure their foreign economic policy. Moreover, in such a way that the US share in Chinese exports has become quite stable and unexpectedly rapidly declining. Many problems and contradictions that could be resolved by themselves in the event of China’s real departure from the rigid state regulation of the economy only accumulated.
Shortly after the presidential election of 2016, Brad Setser, a senior fellow for international economics at the American Council on Foreign Relations, published a statement that can be called programmatic for the Trump administration:
Nevertheless, Trump's “trade offensive” was a big surprise for China. Europe also experienced a considerable shock from the new American president, but for the sake of victory in confrontation with a rival from the East, the US, apparently, decided to return to economic friendship with the EU. Data on Trump's latest contacts with European leaders and with the head of the European Commission, Jean-Claude Juncker, is clear evidence of this.
Against this background, a kind of supplement looks like a very active quoting by the Western media of new ideas of perhaps the oldest of world politicians - former US Secretary of State Henry Kissinger. He, obviously, remembering his experience of using China as a deterrent to the USSR, now offers something similar, but in a mirror version.
Namely, to use the growing Russia as a kind of lever for influencing the intractable, and economically extremely aggressive China. From such positions, the veteran politician highly appreciates the results of the Helsinki summit of Trump and Putin.
Apparently, Kissinger is not embarrassed even by the fact that now under the pressure of Trump, China has found itself in the position of a nude model. But the former state secretary is completely unwilling to take into account the fact that Russia receives more and more new portions of sanctions from the US, while more and more new proposals from China. Even if it is not always real Russia profitable.
Not so long ago, Chinese leader Xi Jinping promised Washington a "retaliatory strike." But he is now very much hampered by the slowdown in economic growth and not the most reliable position of the national currency. It remains in limbo due to the colossal amount of loans and subsidies issued by the People’s Bank of China to exporting companies.
Earlier, we recall, China quite easily fought off any inclinations of the United States to the trade standoff, manipulating the yuan. Now, for the devaluation, it is certainly not the most appropriate time, since there is a prolonged downward trend in the value of all types of Chinese assets in the market. And the most unpleasant thing for Beijing is that at the same time American papers are becoming more expensive.
Last Tuesday, the latest official data of the Chinese National Bureau of Statistics became known. The PMI index was 51,2 in July, which is 0,3 lower than the June figure. The PMI is considered to be the key barometer of the economy, and it is precisely it that indicates a decline in manufacturing activity in China, although not very significant.
Yet another blow to the Chinese economy could be plans announced at the end of June by the White House to establish duties on almost the entire list of Chinese imports. The total amount of duties, more similar to sanctions, can be up to 500 billion dollars. Usually, in such cases, China does not pull with tough answers, but so far no one has reported any reaction from Beijing.
Many experts in this regard have the impression that Beijing is preparing either to just immediately throw out the white flag, or to wait for some accompanying decisions of the European Union. So far, Beijing hastened to announce new measures to stimulate exports, which in fact boil down to a further increase in the volume of subsidies and concessional lending.
If, after this, Europe once again chooses to go on the American fairway, the retaliatory Chinese measures may turn out to be as unexpected as they are tough. If the EU tries to somehow mitigate the American negativity, a truce may even happen in the growing trade war.
A lot now will depend on how the US administration, in cooperation with the Fed, is ready to continue to allow the whole world to overestimate the dollar, which, in fact, leads only to a further increase in the dimensionless American public debt. And also on how much the CPC Central Committee and the People’s Bank of China are ready to continue to allow Europeans and Americans to underestimate the yuan.
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