1/ Following 10 days of travel in China, I feel China's plan for the US-China trade war is coming into focus around three central planks:
- Maintain composure and resolve;
- Avoid being isolated;
- Hit America where it hurts.
Beijing assumes no near-term resolution. (Short 🧵).
- Maintain composure and resolve;
- Avoid being isolated;
- Hit America where it hurts.
Beijing assumes no near-term resolution. (Short 🧵).
2/ Maintain composure and resolve:
- Present Chinese leadership as calm and confident;
- Condition Chinese public for economic turbulence;
- Divert frustration to US as source of problems;
- Stoke nationalism by invoking China's history of holding firm against external bullying.
- Present Chinese leadership as calm and confident;
- Condition Chinese public for economic turbulence;
- Divert frustration to US as source of problems;
- Stoke nationalism by invoking China's history of holding firm against external bullying.
3/ Avoid being isolated:
- Beijing expects US will seek to form global coalition to isolate and pressure China;
- To counter this approach, Beijing is working to find common cause with Asian and EU countries, as well as developing world, in insulating against US pressure.
- Beijing expects US will seek to form global coalition to isolate and pressure China;
- To counter this approach, Beijing is working to find common cause with Asian and EU countries, as well as developing world, in insulating against US pressure.
4/ Avoid being isolated (cont.):
- Xi declared China and EU should "jointly oppose unilateral acts of bullying."
- Xi will visit Vietnam, Malaysia, and Cambodia soon;
- Beijing has laid out a neighboring countries strategy to avoid encirclement:mfa.gov.cn/eng/xw/zyxw/20…
- Xi declared China and EU should "jointly oppose unilateral acts of bullying."
- Xi will visit Vietnam, Malaysia, and Cambodia soon;
- Beijing has laid out a neighboring countries strategy to avoid encirclement:mfa.gov.cn/eng/xw/zyxw/20…
5/ Hit America where it hurts:
- Beijing believes it can tailor retaliatory actions to target strategic US sectors, withhold key inputs for US economy, put pressure on US macroeconomy, and dial up discomfort for US consumers.
- Beijing will seek to reduce dependence on US goods.
- Beijing believes it can tailor retaliatory actions to target strategic US sectors, withhold key inputs for US economy, put pressure on US macroeconomy, and dial up discomfort for US consumers.
- Beijing will seek to reduce dependence on US goods.
6/ PRC leaders don't expect near-term resolution to trade war. They view it as symptom of broader US strategy to suppress China's rise. They believe PRC concessions now would only invite further US pressure. They're treating moment as strategic challenge, not an economic crisis.
7/ Rightly or not, Beijing believes its political system is more unified, hardened, and disciplined than the US government to withstand trade war pressure. They're signaling they will hold firm and wait for Trump to shift course. I don't expect either side to blink soon. END.
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