This morning in Asia the Chinese government angrily declared it can take the trade pain and there will be no more trade negotiations with the Trump administration for the time being.
The China state media commentaries fueled concerns that the U.S.-China trade disputes will prolong, deterring risk-taking,” said Koji Fukaya, chief executive officer at FPG Securities Co. in Tokyo. “This issue will probably be one of the major market drivers for a while as U.S.-China trade war influences global economic conditions,” reported Bloomberg.
“If the U.S. doesn’t make concessions in key issues, there is little point for China to resume talks,” said Zhou Xiaoming, a former commerce ministry official and diplomat. “China’s stance has become more hard-line and it’s in no rush for a deal” because the U.S. approach is extremely repellent and China has no illusions about U.S. sincerity.”
The simple fact is that the Trump administration holds all the trade cards. The current Chinese economic model cannot exist without access to American markets. They can last for a while, using their vast foreign currency reserves to stay afloat, but eventually factories will close, workers will lose their incomes, and civil unrest will follow.
We are now in a waiting game — China is hoping Trump is not re-elected, and a new Democrat appeaser will come into office, taking us back to the good old days where China can rip us off at will.
Watch for a lot of Chinese ‘meddling’ in the 2020 election.