Fearful China in Trade War With Largest Customer

In China, people at the highest levels are beginning to fear. China’s victory lap around the One Belt One Road was meant to carry it in triumph across the entire occupied globe. But Hong Kong happened. Xinjiang is taking too long to pacify. Taiwan tightened up. And somebody leaked sensitive papers on Chinese plans of oppression.

All of this is framed by a primordial fear. Before Mao’s victory, regional conflicts tore China apart and allowed the Japanese to seize major parts of the country. Regional conflicts in the future are the single biggest threat that China does not want to face again. The Chinese are suppressing the threat in Xinjiang, and now maybe in Hong Kong. But China does not want to have to suppress regional threats. Xi, however, is doing just that and he also came in suppressing political threats with the purges. Between that and mishandling the Americans, many nerves are being touched. I would bet that the leak came from the Central Committee, and that Xi has enemies.__ GF

Perhaps Xi has failed to crush the Tuanpei sufficiently. Perhaps another of the princelings feels emboldened by Xi’s ineptness in pacifying Xinjiang, suppressing the Hong Kong rebellion, or in cowing Taiwan sufficiently. Perhaps the CPC is infiltrated by spies of Germany or France, trying to weaken the Chinese so as to obtain better trade terms. 😉

Xi’s incompetence is manifest. The major task of the Chinese president is to handle the American president, and Barack Obama, George W. Bush and Bill Clinton were handled. He failed to bring Donald Trump under control with promises of future meetings and postponed studies. As a result, China is in a trade war with its largest customer. In addition, quite apart from the trade issue, the Chinese financial system is unstable and growth is slowing. Now, Hong Kong is out of control, and the global talk is of Chinese concentration camps. This is not what was expected from Xi.

The Central Committee is the ultimate arbiter of what China does, particularly if the president weakens and loses his way. There must be some in the Central Committee who remember Xi’s inauguration and have concluded that China’s evolution has not gone the way they expected and Xi promised. Geopolitical Futures

We are living in interesting time, and Mr. Xi is beginning to discover this. Mr. Trump would like to help, but he is distracted by petty whining children with names like Schiff, Omar, Pelosi, and Maddow. These must be frequently spanked and that takes much of his time.

China isn’t well prepared to fight a trade war with America. For a couple of reasons. One of them is that its economy is slowing, as it faces the “middle income trap,” and the Lewis turning point.

The income trap is a situation where a country’s growth rate slows down as it reaches middle income. The Lewis point is a situation where the “reserve army” of labor shrinks, pushing wages and eroding the country’s competitive advantage in labor intensive industries. Chinese labor becomes expensive vis-à-vis India, Vietnam, and Indonesia. And that places additional pressure on the country’s growth.

Meanwhile, China has yet to develop a robust domestic consumer market that will accommodate its growing production capacity. __ Forbes

Those who pay attention understand that this so-called trade war is merely an appeal by President Trump for China to reform its ways of doing business. But since long evolution has “baked in” the Chinese character that underlies China’s ways of doing business, nothing significant is likely to be changed by the use of outside persuasion — at least not in the very short term.

All of Nobel Prizes in science awarded to Chinese were won by scientists who had done their main research in the west. The overseas Chinese phenomenon is significant in that “divergent evolution” is taking place before our very eyes. If the “Chinese character” and ways of doing business are going to change, they are likely to change via divergent evolution — fast and slow.

Background Reading:

PDF review of “Poorly Made in China” by Paul Midler


‘You can never be China’s friend’: Spengler


The Pressure on China

The Chinese Govt Is Scanning Churchgoers’ Faces, Fingers

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