President Donald Trump has been branded “a bungling, capricious leader” by an influential Chinese academic for starting a trade war he cannot win.
In a blistering attack on White House policy, Yu Yongding, a former director at the influential Chinese Academy of Social Sciences, has shredded the argument that the United States can derail the world’s second-largest economy.
“Trump claims that the ‘trade war’ with China ‘was lost many years ago by the foolish, or incompetent, people who represented the US,’” Yu, who also served on the Monetary Policy Committee of the People’s Bank of China in the early 2000s, said.
“But it is he who most likely will be remembered as the fool – a bungling, capricious leader whose attacks on China only made that economy stronger, at least partly at America’s expense,” he added.
Yu’s condemnation of what is rapidly becoming a new Cold War was issued just days before Trump announced that trade talks were “moving along nicely.” He made the comment after a telephone chat with President Xi Jinping ahead of their planned meeting at the G20 later this month.
But the ‘mood music’ at the court of the Donald can quickly change. As for the state-run Chinese media, it was a godsend.
“China and the US have had differences, and this has caused [a] negative impact on the industries of both nations and global trade. China doesn’t want to see that,” Xi was quoted as saying by official news agency Xinhua and the government-owned television channel CCTV.
“China and the US have precedents of resolving difficult trade and economic problems through dialogue. The teams of both sides must step up communication and coordination on issues of their concern to put forward a proposal acceptable to both sides,” he added.
Beijing is becoming increasingly anxious about a cooling economy buffeted by a drop in consumer spending and a dip in factory activity. Third-quarter GDP growth has also been hit, falling to levels not seen since the 2009 Great Recession.
At the same time, the economy is going through a transformation from low-cost production to high-tech manufacturing, backed up by an expansive services industry and a more sophisticated consumer sector.
But overhauling the old export-fueled model, as well as being embroiled in a brawl with the US, has taken its toll.
Very vulnerable sector right now in China is small business, getting hurt the most from trade war, deleveraging and overall tightened economy. pic.twitter.com/lQ30uROwp3
— Scott Laprise ???????? (@researchbeijing) November 2, 2018
In a move to boost deteriorating business confidence, Xi’s administration has unveiled a raft of measures, including tax cuts, infrastructure spending and cheap financing for struggling private sector companies, while ramping up the war on debt.
“[A] very vulnerable sector right now in China is small business, getting hurt the most from [the] trade war, deleveraging and overall tightened economy,” Scott Laprise, a research analyst in Beijing, said.
On Thursday, Xi again made an attempt to ease those fears when he “convened an unprecedented symposium,” according to the Chinese media, to hear the views from the private sector.
Reports confirmed that tech titans Robin Li, the co-founder of Baidu which is China’s answer to Google, and Pony Ma, the head of online giant Tencent, attended the event.
“In recent days, some people have made remarks negating and doubting the private economy,” Xi told the audience of entrepreneurs.
“For example, some argued that the private economy has completed its mission and will fade out … some wrongly argued that setting up party cells and labor unions in private businesses [are] intended to control private enterprises … all these statements are completely wrong and do not conform to the party’s policies,” he added.
Still, heavily subsidized state-owned enterprises dominate the business landscape in China, squeezing the private sector of funding.
The decision by Trump to slap tariffs on Chinese imports to the US worth US$250 billion has also wreaked havoc.
With another round of duties worth slightly more than $250 billion on the table, solving the trade war has become a priority for Beijing and Washington.
“Unless the leaders of the two countries can strike a deal at next month’s G20 meeting, the situation is likely to worsen,” Yu, the former CASS director, wrote in an opinion piece for Project Syndicate. “That’s better news for China than it is for the US.”
Prophetic insight or “foolish” rhetoric? For the rest of the global community watching on the sidelines, only time will tell.