NEW YORK TIMES: If you want to know why Donald Trump shouldn’t expect to win a trade war against China, look no further than Alibaba,…
NEW YORK TIMES: If you want to know why Donald Trump shouldn’t expect to win a trade war against China, look no further than Alibaba, the country’s giant e-commerce version of Amazon.
Last month, I had two in-depth conversations with Ming Zeng, the e-commerce giant’s head of strategic planning and among the smartest minds in business and finance in China.
Ming made it clear that China has little real need for America any more – not US products, and especially not US ideas. When thwarted, China has shown it can think up its own.
At the same time, the Trump administration seems to be doing its level best to run a competition calculated from the starting gate to lose the race, or the war, whichever it turns out to be. The US president’s latest effort was to threaten a rise in tariffs on US$200 billion worth of Chinese goods – from 10 per cent to 25 per cent.
Within 24 hours, China quickly reciprocated with a list of 5,207 American products, worth US$60 billion, on which it pledged to exact new tariffs ranging from 5 to 25 per cent if Trump implements his threats.
And there we have — a full-blown trade war.
LITTLE UNDERSTANDING OF CHINA
Fortunately, Trump has extended a comment period before implementation until September. Meanwhile, markets on both sides of the Pacific continue unsettled – at times balancing on the edge of panic.
While the Chinese stock market has taken more of a beating than the American, Trump seems to think that the United States can stand the pain longer than China and tightening the screws will bring Beijing to the negotiating table.
But that reflects little understanding of either the Chinese mindset or the underlying strength of the Chinese economy which, though weaker than a year ago, is still growing nearly twice as fast as the American.
And this by no means reflects how bad it could get as individuals with little understanding of either the stakes or the mechanisms plunge into this pending maelstrom.
HARDLY COMPETITION
Last week, Secretary of State Mike Pompeo unveiled with some fanfare another way of dealing with, even isolating China that approaches the ridiculous in its scale and futility. Dubbed the “Indo Pacific Economic Vision Programme” it was widely viewed as a counter to China’s long-standing Belt and Road development initiative that has ensnared nations across Asia and onward to Europe.
