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Monday, September 23, 2019

China Trade War

For John, BLUFChina has tried to maximize its own economy by snookering other nations.  Nothing to see here; just move along.

From Fox News , by Ms Helen Raleigh, 22 September 2019.

Here is the lede plus two:

China already lost in the trade war with the U.S.  Although you will never hear Chinese authorities, especially President Xi Jinping, admit it as such, the evidence is everywhere and only becoming more compelling by the day.

Reuters recently reported that based on the Chinese government's own data, China's economic slowdown has worsened in August, with "growth in industrial production is at its weakest in 17-1/2 years amid spreading pain from a trade war with the United States and softening domestic demand.  Retail sales and investment gauges worsened too."  Despite such poor readings, Premier Li Keqiang insists that China is still on track to achieve 6 to 6.5 per cent growth rate this year.

Given the Chinese government's tendency to present a rosier economic picture to satisfy political goals, most China watchers believe that Li's statement was an about-face, and that the actual economic situation is much worse.

It is about farm imports, and in particular, pigs.

Second, China's own hog industry is experiencing the worst African swine fever in decades.  The government has been criticized for its ineffective measures to stamp out the epidemic.  It is estimated that China could lose up to 50 percent of its pig population by the end of 2019.  Pork prices have spiked by more than 46 percent so far, and some experts predict the price increase may be over 80 percent by next year.  This spike has pushed prices for other types of meat higher as well, increasing inflation pressure to the overall economy.  This has hindered Chinese consumers' willingness and capacity to spend in other areas.  Given the pivotal role pork plays in the Chinese diet, the country could potentially experience social unrest if the pork price continues to skyrocket while the supply continues to be sparse.

China exempted U.S. farm products, including soybean and pork, from additional tariffs, effective Sept. 17.  This announcement was seen widely as a goodwill gesture ahead of the October trade talks between U.S. and China.  But this seems to be a desperate, self-serving measure, because all the other pork exporting countries combined couldn't fill China's supply shortage.  Simply put, China has a need of pork from the U.S., and its suspension from additional tariffs is, in essence, a tactical and indirect acknowledgment that it won’t be able to sustain this trade fight for much longer.

And, it isn't a flash in the pan.  The trade war started with China and finally a US President stood up.

If China had hoped that it could simply wait until Trump loses the 2020 presidential election to get out of the trade war, it has to think again.   At the most recent Democrat presidential debate, not a single candidate proposed to remove the trade tariffs Trump imposed on China.  So even if Trump loses, China likely would not get someone friendlier in the White House.
Hat tip to the InstaPundit.

Regards  —  Cliff

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