Deficits, debt and delusion in US-China trade

A flurry of accusations, finger pointing and political grandstanding dominate the headlines as the trade war with China escalates.

- John J Metzler

Global markets seethe confounded with roller-coaster fluctuations and serious jolts, amid growing economic uncertainty.

As usual China plays the victim in responding to what is a tariff war which aims less about reaching Beijing’s policymakers as soon than opening the discussion for overdue and serious rounds of trade and technology talks. Indeed the world’s two largest economies seem to be squaring up to grapple for managing an annual trillion US dollar trading relationship which threatens to go off the rails.

On the surface, China will “stay confident, remain calm, and focus on managing its own affairs,” said leader Xi Jinping, stressing that the country’s “development” has never relied on the “alms of others”.

Without question, the Trump administration views China as the United States’ primary adversary, not only in military terms, but especially in economic power. Yet contrary to the former Soviet Union, contemporary China has both a serious military capacity but even more so a much stronger economy of scale and through its export access, and the power to devastate foreign manufacturing and jobs.

While it’s not a big fan of tariffs, they come a time when the other medicines don’t work.