One of the advantages Beijing has in a trade war with the US, some observers have noted, is control of the public narrative. China’s government controls the media, so they can help shore up support for standing firm and not giving in to demands seen as unreasonable.
The US, on the other hand, has to cope with a bitterly divided electorate. As well, on tariffs, US President Donald Trump’s own Republican Party largely opposes him. The Democrats, though traditionally sympathetic to more protectionist trade measures, will take any opportunity to challenge Trump.
So far, the Chinese government’s insistence that its public will show a greater resolve in a trade war hasn’t exactly played out. While the US stock market continues to hold its ground to some extent amid tariff threats, Chinese stock exchanges, which are more vulnerable to the sentiment of retail investors, look vulnerable.
In the US, trade threats have weighed on stock prices, but institutional investors seem determined to wait the drama out with a calm approach to a conflict they see working itself out before long.
Some investors, including the “storied” emerging-markets investor Mark Mobius, are now expressing support for Trump’s trade battle with China, saying “the US is going to win this one.”
The US electorate will certainly challenge Trump if (or when) the economy takes a beating. But if it’s just the Congress – which now enjoys an approval rating of just 15% – that is pushing back against the tariffs, the president will likely stand firm.
A purported directive from the Chinese government, which doesn’t cite a specific agency, may shed light on Beijing’s efforts to change that dynamic, suggesting that leaders in Beijing are worried they haven’t sufficiently guided public opinion.
The leaked order, purportedly sent to media outlets, was published by China Digital Times, which often posts such notices. Below is a translation by CDT (the original Chinese can be found here).
Whether the notice, which was not corroborated by Asia Unhedged, is authentic or not, Chinese media reporting is already largely in line with the suggestions made below.
First, regarding the US-China trade conflict:
Three “Don’t Relays”: Don’t relay comments from Trump, from US government spokespersons, or from US officials. Don’t relay US news reports or commentary on the trade conflict without waiting for response from the Ministry of Commerce.
The China Securities Regulatory Commission will soon organize experts to lead the chorus in stabilizing market expectations. The next step will be for the People’s Bank of China to take to the stage with substantive policy moves to boost high-quality economic development.
[Vice-Premier] Liu He has indicated that this stage of the US-China trade conflict requires calm and rationality. Each department should strengthen its contribution to the stabilization of market expectations. We stop negotiation for now, acting tit for tat, roll out corresponding policies, hold public opinion at a good level without escalating it, limit scope, and strike accurately and carefully, splitting apart different domestic groups in US. The trade conflict is really a war against China’s rise, to see who has the greater stamina. This is absolutely no time for irresolution or reticence.
Don’t attack Trump’s vulgarity; don’t make this a war of insults.
Note different implementation stages in the breakdown of the [US tariffs on Chinese exports worth] US$50 billion: levies on the $34 billion from July 6 are highly likely to happen. Levies on the remaining $16 billion will be considered on July 13, and take effect at the beginning of August, if approved.
All media should prepare well for protracted conflict. Don’t follow the American side’s fluctuating declarations. Play down the correlations between the stock market and trade conflict.
Second, other matters:
Give prominence to reports on economic bright spots and developments, showing our economy’s prospects for continued steady improvement. Emphasize economic reports using important page placement and timing. Interview experts recommended by each department; websites and Weibo and WeChat accounts must emphasize suitable forms of network propaganda.
To re-emphasize: do not make further use of “Made in China 2025,” or there will be consequences. (June 29) [Chinese]