Let's take a look at how China sees the escalation of the trade war as described by the Xinhua News Agency in Beijing.

Five World-wide Hazards of the United States Launching Trade War Against China

In a blistering commentary (in Chinese), the Xinhua News Agency in Beijing, a government mouthpiece, announced Five World-wide Hazards of the United States Launching Trade War Against China.

The US government has not only launched a trade war with China, but has been escalating in depth and breadth, and there has been a trend beyond the scope of trade disputes. This has brought more and more uncertainty to the world’s prospects and has become a threat to global interests. A great bane of human well-being.

The US government's thinking on China's economic relations and trade bullying has produced or is currently producing five major world-wide hazards, affecting the international community's perception and understanding of global governance and development.

Point 1: World Economic Growth

  • US investment bank Morgan Stanley warned that if the United States imposes a 25% tariff on 200 billion US dollars of Chinese goods for three or four months, then the global economic growth rate may slow down by about 50 basis points to 2.7%.
  • According to the analysis of the Japanese research institute Daiwa and the general research, Japanese companies will directly lose about 500 million US dollars due to Sino-US trade friction. French Finance Minister Bruno Lemer said that Sino-US trade friction will directly lead to a reduction in the circulation of goods and damage employment opportunities in Europe and France.
  • Due to the deterioration of the world economic environment, some countries will have to relax monetary policy to stimulate their economic growth. This will fuel global debt accumulation, increase medium-term financial risks, and hinder the long-term healthy development of the world economy.

Point 2: Seriously Undermine the International Economic Order

  • By circumventing the WTO dispute settlement mechanism, provoking economic and trade frictions according to domestic laws, and levying tariffs on Chinese goods on a large scale without WTO authorization or violations – this shows the US’s disregard of the multilateral trading system and its self-interest over international rules. The embarrassment above makes the international economic order face an unprecedented danger.
  • What needs special attention is that the United States, which prides itself on "complete market economy," also openly uses state power and technological advantages, and implements a technological embargo on Chinese technology companies such as Huawei in the name of "national security." This is a ruthless trampling on the principles of market economy and the order of commercial civilization.
  • The actions of the United States have already made some technology companies in other countries feel the fear of the cold weather and caused incalculable direct and indirect damage to the development of the world's science and technology industry.

Point 3: Creating a New Imbalance in the Global Economy

  • The direct excuse for the United States to launch a trade war with China is "trade imbalance." In fact, the root cause of the US trade deficit with China is caused by structural problems such as too much consumption and insufficient savings.
  • If the United States does not focus on solving its own problems, it will impose high tariffs on goods from other countries such as China. The result will only be counterproductive.
  • More seriously, the United States itself is one of the main causes of global economic imbalances. Its current practices will not only help the current global economic rebalancing, but will create a new global economic structural imbalance.
  • The direct impact and derivative effects of the US trade war against China and some of the technological embargoes are creating new distortions and creating new structural imbalances in the world economy.

Point 4: "Destructive Government Variables"

  • The U.S. government’s erratic and profit-seeking features are exposed in Sino-US trade negotiations, and the uncertainties in its manufacturing communications have seriously disrupted the expectations and behavior of global market players.
  • Previously, from the withdrawal of UNESCO, the UN Human Rights Council and other international organizations, to the withdrawal of the Paris Climate Agreement, the Iranian nuclear comprehensive agreement, the China-Treaty Treaty and other international treaties, the "American priority" led to a series of destructive acts against the world. The situation of peaceful development constitutes a serious impact.
  • Obviously, the United States is becoming a "black swan" with high vigilance in the international community and a "grey rhinoceros" with strict precautions.

Point 5: Indiscriminate Violation of Economic Sovereignty of Other Countries

  • At the negotiating table, the US government proposed a number of arrogant demands to China, including restricting the development of state-owned enterprises. Obviously, this is beyond the scope and scope of trade negotiations and touches on China's basic economic system.
  • This shows that behind the United States launching a trade war against China, it is trying to invade China's economic sovereignty and force China to damage its core interests.
  • In the 1974 Charter of Economic Rights and Duties of States adopted by the United Nations, it has clearly stated that “Every country has full and permanent sovereignty over all its wealth, natural resources and economic activities, including ownership, use and disposal rights, and Freedom to exercise this sovereignty."

Points Made

Trump has a point. But so does China.

National Security Mockery

Trump took national security and made a mockery of it.

Huawei is supposedly a national security threat. Yet, Trump is willing to include that in a trade deal.

Steel and aluminum are allegedly national security threats.

And what about the alleged national security threat of cars from the EU? No one in their right mind believes that.

Finally, on the verge of having a deal with Mexico, Trump conflated trade with border security.

Pack of Lies or Just Plain Stupid?

  1. If Huawei is a security threat, Trump should not be willing to include Huawei in a trade deal. Yet, Trump offered that.
  2. If steel and aluminum are national security threats, he should not have taken tariffs off Mexico and Canada. But he did, to help his USMCA trade deal, only to put them back on a few days later over border issues.
  3. The alleged national security threat of EU cars is so preposterous that no one can possibly believe it.

So which is it? A pack of lies or just plain stupid? Any votes for both?

This material is based upon information that Sitka Pacific Capital Management considers reliable and endeavors to keep current, Sitka Pacific Capital Management does not assure that this material is accurate, current or complete, and it should not be relied upon as such.

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