Home United States USA — Events Trump's China Trade War Could Lead to Xi's Destruction

Trump's China Trade War Could Lead to Xi's Destruction

294
0
SHARE

Beijing has reacted to economic crisis by cracking down domestically, which could have unintended consequences.
Many observers dismiss the China policies of President Donald Trump as mere protectionism or worse, but in fact the White House has put Chinese dictator Xi Jinping into an increasingly difficult bind. By pursuing America’s long neglected interests in global trade and supporting democracy in Hong Kong, Washington may be pushing China towards political change and even an eventual democratic opening.
On Wednesday, Secretary of State Mike Pompeo announced that the Trump Administration no longer considered Hong Kong to have significant autonomy from mainland China (citing in part China’s latest intention to crack down on the island’s protests with a new national security law), suggesting that it may rescind special trade status with Hong Kong as a result. Doing so would have widespread repercussions for Hong Kong and Chinese markets, though the National People’s Congress was still poised to pass the controversial security law despite the threat on Thursday.
The administration also took off the gloves with China over U. S. listings by mainland companies that fail to follow U. S. securities laws. This came after the Commerce Department finally moved to limit access by Huawei Technologies to high-end silicon chips made with U. S. lithography machines. The trade war with China is heating up, but a conflict was inevitable and particularly when it comes to technology.
At the bleeding edge of 7 and 5 nanometer feature size, American tech still rules the world of semiconductors. In 2018, Qualcomm confirmed its next-generation Snapdragon SoC would be built at 7 nm. Huawei has already officially announced its first 7nm chip—the Kirin 980. But now Huawei is effectively shut out of the best in class of custom-made chips, giving Samsung and Apple a built-in advantage in handsets and network equipment.
It was no secret that Washington allowed Huawei to use loopholes in last year’s blacklist rules to continue to buy U. S. sourced chips. Now the door is closed, however, as the major Taiwan foundries led by TSMC will be forced to stop custom production for Huawei, which is basically out of business in about 90 days when its inventory of chips runs out. But even as Huawei spirals down, the White House is declaring financial war on dozens of other listed Chinese firms.
President Donald Trump said in an interview with Fox Business News that forcing Chinese companies to follow U. S. accounting norms would likely push them to list in non-U. S. exchanges. Chinese companies that list their shares in the U. S. have long refused to allow American regulators to inspect their accounting audits, citing direction from their government—a practice that market authorities here have been unwilling or unable to stop.
The attack by the Trump Administration on shoddy financial disclosure at Chinese firms is long overdue, but comes at a time when the political evolution in China is turning decidedly authoritarian in nature and against any pretense of market-oriented development.

Continue reading...