Photo: iStock
Photo: iStock

There is a palpable confidence within the Trump administration – and among a vocal circle of China hawks in Washington – that leaders in Beijing will be forced to capitulate to trade demands in short order, due to a fragile economy.

Such confidence is based on complete ignorance of what is happening in China, others argue, noting that the trade war is only accelerating China’s economic goals.

That is the opinion of private equity giant KKR, which pointed out on Thursday that Beijing’s plan to transition into a consumer services economy is already well underway, and a trade war plays into this shift, and deepens economic integration in Asia.

“Overall, we believe that the current trade wars with the United States will only accelerate China’s shift away from an export economy dependent on global trade/flows towards a more self-reliant consumer services economy that is gaining prominence, particularly within Asia,” wrote Henry McVey, head of global macro and asset allocation, as quoted by CNBC.

“No doubt, this transition will take time, and it will likely be complicated in the near term by the political agendas of both the East and the West,” McVey added. “However, the long-term trends of the Chinese millennials helping to accelerate the transition of the nation towards more of a domestically focused, services-based economy with increasing technological advancements is undeniable.”

The trend represents “a significant long-term opportunity,” even amid trade tensions, to ” help fund this transition and receive potentially outsized returns along the way.”

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