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The View
Opinion
Richard Harris

The View | Why Trump’s trade war is pushing China to become smarter and stronger, faster

  • Richard Harris says Donald Trump’s trade war on China found an echo around the Western world, where even Hong Kong investment is suspect now. But, on balance, he is doing China a favour by pushing it to become more self-sufficient

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President Xi Jinping visits Wuhan Xinxin Semiconductor Manufacturing Corp, in Wuhan, Hubei province. China could react to the trade war by becoming more self-sufficient. Photo: Xinhua

It was hilarious to watch world leaders jockey for position for the “family photo” at the G20 summit in Argentina last week. Wielding huge power and bulging with oversized egos, these normally self-assured individuals behaved like primary school kids on their first day, scrambling to stand next to someone they like.

Russian President Vladimir Putin and Saudi Arabian Crown Prince Mohammed bin Salman clung to each other like two lonely strangers at a dance. US President Donald Trump acted the tough guy, but just looked miserable. International Monetary Fund managing director Christine Lagarde and British Prime Minister Theresa May wore cheery smiles that hid their inner turmoil. Perhaps the biggest influencer of all, German Chancellor Angela Merkel, missed the session, delayed by a dodgy plane. Everyone wished they were somewhere else.

The final communiqués at these lovefests must usually be written beforehand for anything to be agreed. Trump is the exception. He likes one-on-ones. He is a professional deal maker in a way that does not come easily to politicians. So, the big meeting between President Xi Jinping and Trump was always going to produce a result. About the only thing we are sure of now is that there will be a tariff truce until March – but that is just what Trump wants; it gives the other side enough pressurised breathing space to move its position without losing face.

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The family photo at the G20 summit on November 30. Photo: AFP
The family photo at the G20 summit on November 30. Photo: AFP
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And move China must. The nation has been caught short with Trump’s attack on its terms of trade, if only because it found an echo around the world. The problem with moving is that capitalism with Chinese characteristics is very different from, well, capitalism. It demands state control over economic activity. Even in some private and foreign companies in China, party organisations have demanded to have their say on business operations and investment decisions.
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