This trade war is unlikely to resemble World War I, when the opposing powers threw everything they had into the initial weeks of combat. It is more likely to resemble World War II, when the “phony war,” or Sitzkrieg, went on for more than a year before Germany invaded France.
China’s response to the Trump tariffs is limited, and understandably so. Its position is paradoxical: at the same time that it imposed retaliatory tariffs on US goods, it is trying to restore US exports of Qualcomm handset chips to ZTE, which just fired its top management to comply with an expected agreement with the Trump Administration.
If China wanted to hurt the US economy, it has been widely observed, it would encourage Chinese consumers to shun US goods sold in China, from Apple to Starbucks. It has done nothing of the sort. A possible exception is the Chinese court ruling in favor of United Microeletronics Corporation against Micron, which led to the ban of certain Micron chips.
Instead, China will prepare for a more intensive trade war by securing its access to key technologies, especially semiconductors. Handset chips are the most obvious case in point after the ZTE affair.
It will take China a year and a half by the best-informed estimates to establish an alternative supply chain, presuming a virtually unlimited R&D budget and continued cooperation from Taiwan and South Korea, the main providers of semiconductors to China.
Huawei for example powers some of its top of the line handsets with the Kirin chipset. The chips are made by Taiwan Semiconductor. Beijing would have to be confident that Taiwan would support an alternative supply chain in the event of a full-scale trade war with the United States.
What we have not seen, and will not see any time soon, is
1: Chinese government calls for consumers to boycott US brands;
2: Competitive devaluation of the RMB;
3: Politically-motivated sales of US Treasuries; and
4: More aggressive military moves in the South China Sea.
What we will see (and may have to look hard to see) is
1: A crash program to replace key high-tech components with domestic substitutes;
2: Quiet efforts to increase the use of the RMB as a trading currency;
3: Continued deleveraging of financial institutions to buttress China’s banking system against prospective shocks; and
4: Subtle military pressure on Taiwan and South Korea.
China will want to gauge President Trump’s intentions before deciding on future action, while securing its position in the event of a trade war escalation.
nice
If China responds, Trump will be ousted.
USA is broke and this is a sneaky way to raise taxes on dumb Americans. LOL!
The tariffs that USA imposes on the imports of steel, aluminium, Chinese products, European cars, etc. are tantamount to imposing another tax on products purchased by US consumers. They are like a new kind of sales tax on consumer products. While China and other countries may mitigate the impact of the tariff by the depreciation of their currencies against the US dollar, the American consumers have no way to avoid this 25% “tax” on the products that they buy and consume.
I am pissed that I have to pay $35 for 4 pairs of sock instead of $25 at Walmart.
Looks like Israel not onboard in this trade war, Mr Goldman is telling us something which I can’t simply comprehend!
China is the top dog in trade——they have already won——-I bet a dollar to a donut that Mr Smarty Goldman——-never read the writings of Sun Tzu 544BC–496BC———one man who has is President Xi——a big fan——-a quote "All men can see these tactics where by I conquer, BUT what no one can see is the strategy out of which victory is evolved." Another foolish article by the so called Mr Smarty!!!
Are there any Chinese big weapons ?
Unlike the Chinese who can’t vote.
Won’t be long now before nursey comes to change your diaper
Is there Walmart in China ?
All of China’s neighbors have been wanting CHina stopped from rising again. But of course you’re in London (right, yeah) so you can read other points of view, not just the CCP mouthpeices.
So then they can vote out Trump in 4yrs, unlike the people of CHina who cant vote out the CCP.
Remember, America First slogan!
‘Quiet efforts to increase the use of the RMB as a trading currency’. That requires China to allow the RMB to float freely, and for China to run a large current account deficit. Where are countries going to get RMB if they don’t?
Is China ready to assume the role played by the US?
Ivor Large
You are racist and pathetic. I hope you are banned from polluting this forum.
Ivor Large You see how cleverly the CCP is playing the psychological disinformation games through its wumao trolls here? The commie agents worried about US consumers paying more taxes? So funny. Commies are nervous, their stock market is down. I rather have a job and buy more expensive stuff than have no job to buy even the cheap stuff. Keep the money in the country.
Vikram Reddy,
I am not concern with the fate of the Americans. I just State a fact to show how stupid are the Americans.
China’s been watching all movements and cautiously chooses the best ones. Let’s go on checking the likely outcomes.
Interesting to see how the US economy will perform with increased inflation and interest rate hikes. Should be no problem for the 10% richest Americans, but for the 90% poorest it can be a heavy burden. President Trump must make changes in the US pension funding. The tax payers will have to increase their funding of their pensions. Increased cost for Medicare is too on President Trump agenda. China will probably spend less money buying US Treasury Bonds and spend more money developing new markets in Asia. A lot of promising investment opportunities in Asia.
Richard Truong I read much more wacist coming from small wumaos. The 3% is statistics… numbers. Just like data on population size (!) you can’t arguewith numbers.
What you are saying is that China is working on a long term strategy for winning the war and to hell with the initial skirmishes. The US will make the initial big splash, but slow and steady wins the race. I am sure that unlike the US, every single Chinese action in this trade war will be well thought out before implimentation. And yes I agree, the US is forcing China to become self sufficient in products that it currently relies on from western businesses. so a short term setback will result in a resounding long term gain.
Once more the US has not only shot itself in the foot it has forced it`s allies to follow suit and shoot themselves in their collective feet. Shades of South Africa all over again, where when the West stopped selling it military hardware, That country simply developed it`s own, and in a lot of cases it`s own was superior to the stuff being sold by their old suppliers. China is acustomed to a little short term pain to achieve long term gain. How is the US at that fact of life?
Ivor Large Please just go back under your rock.
Ivor Large
Why in the world would the Chinese want to vote out the CCP when it has taken China from a backward, largely agriculture society and build the the most powerful economy and country on the face of the earth. I don`t suppose you would know that the CCP has taken more than 750 million people out of poverty, and just in the last 20 years.while the US which can change it`s politicians every four years has more than 50% of it`s people in to poverty, 45 millions of which are living in extreme poverty. Never mind the 2.5 million that currently live in your corrupt and cruel prison system and never mind the 100 thousand or so that are in prison who have been falsely convicted and have committed no crime.
And elections in the US are a farce. You do not elect your leaders the " Electoral College " decides who is going to rule the country. If your memory was not so short you would remember that Both G W Bush and D Trump both lost their election bids but were placed in the Oval Office by the Electoral College against the will of the people.
The author writes: "It is more likely to resemble World War II, when the “phony war,” or Sitzkrieg, went on for more than a year before Germany invaded France."
Hmmmm.
Germany invaded Poland on Sept. 1, 1939, and Germany invaded Poland on May 10, 1940. That’s definitely "less" than a year.
Steve Goodlay
Haha, no need to be bright to know that if Trump screws up the economy, he will be ousted.
China’s imports from the US is just a fourth of it’s exports to the US. In a trade war with the US, it has more to lose.
Thomas Daniel Kuhn I wonder why a Yank born in 1940 wants his country (and next generation) to fail.
Either you are another wumao, or something much sadder. A Septic with no children who is a failure.
Sad old man, waiting for the country he has lived in for all his life, to fail….
america first?????
Feeling the heat now..
Ivor Large lol
it’s the other away around if trump decides to lift china in the world trade center china is toast. China forgot that america still possess the most important allies in the world today
Mejares Troy
It seems that only the US still love to use the word "allies" in the business context. The real allies day is long gone. The World has started working toward a multipolar world. Keep kissing the usual ars if you wish, but it’s not gonna give you any money anymore.
China is s communist and all will side to a country who believes in God
Richard Truong bring it on!
You are talking of short run effects. China has a population of 1.4 B while how many has the US? China is surrounded by densely populated and robust economies – Asean, Japan, Korea, Taiwan, Russia (Vladivostok). Remember China is now no.2 and Japan no. 3. Within a decade China will dislodge the US from no.1. That is what the tweeting Trump is so scared, jittery or panicky about – imagine a country that has been on top for 2 centuries being relegated to the background just like that by the "awakened giant" It won’t give up without a fight. With the new "Space Force" being peddled by the Americans, they are threatening to wage not only a trade war but a literal one.
The scenario is like am OVERTIME endgame in basketball where 2 leading teams fight it out. All of a sudden referrers’ calls become close and play is suspended to make way for replays to resolve the issues. It is most often the favored team that complains. The play becomes physical as the favored team, normally a powerhouse with olympic players, looks for excuses to its sub-standard play. Moreover, it will likely cause a change in rules after the game, regardless of who wins !