President Xi Jinping and his cronies in the People’s Republic of China government look like they’re settling in for a long trade war with us. The claim, too, is that deteriorating relations with us, and allowing them to deteriorate further, are a sign of Xi’s strength as a leader of the government and of the Communist Party of China.
This misunderstands, though: those deteriorating relations are a good illustration of Xi’s weakness as a leader, not his strength. It takes strength, mind you, to be willing to change course when the chosen one proves…inopportune.
There’s this, too, from Shi Yinhong, Director of the Center on American Studies at Renmin University in Beijing:
Trump’s actions have seriously agitated the Chinese leadership, who now realize that there’s no chance of reaching a fair deal with the US.
Right. Because it’s unfair of us to demand the PRC stop stealing our intellectual property and our technological secrets. It’s unfair of us to object to the PRC extorting tech transfers and domestic “partnerships” and requiring backdoors into proprietary operating software, all as a condition of doing business in the PRC.
Even the PRC’s wartime decision to devalue its currency, intended to counter the effect of tariffs on its exports to the US, cannot work well over the intermediate- to long-term. That devalued currency serves to make imports into the PRC—things like oil and natural gas both as energy for production and as fuels for home heating, transportation, marine shipping and things like components for assembly into larger components or finished products in PRC factories—more expensive, it lowers the return on US and other dollar-denominated debt instruments, and through those, it drives up the cost of domestic products that depend on those imports.
It also encourages capital flight into a host of suddenly more valuable currencies—primarily dollars, but yen, won, euros, and pounds, also.
And: whether tariffs cost us more than the PRC’s counters cost them remains to be seen. However, that’s not a matter that can be assessed solely in dollars or yuan. Our economy is much larger, wealthier, and more diverse than is the PRC’s; we can absorb more such costs than it can. And I haven’t gotten to the costs of military buildups.
Finally, there’s this on the PRC’s trade war: as companies continue to move their supply chains away from the PRC in response to the stress of this war, as sellers (including farmers) find other markets than the PRC for their goods and services (and crops), the PRC’s war is weaning these enterprises off the PRC market, which can only work to the PRC’s long-term detriment.
All of this illustrates why the good citizens of the PRC can’t have nice things.