Politico | How Trump’s trade war is driving China nuts
Chinese leader Xi Jinping has reacted to American pressure with a level of desperation that is good for neither Washington nor Beijing
This story is published in a content partnership with POLITICO. It was originally reported by William Pesek on politico.com on October 16, 2018.
Five years ago, China’s Xi Jinping rocked the Communist Party establishment by pledging to let markets play a “decisive role” in decision making. Reformists rejoiced as President Xi signalled a revival of Deng Xiaoping’s pro-capitalism revolution.
Things have not gone as planned. First, Xi slow-walked steps to reduce China’s reliance on runaway credit, debt and an antiquated state sector. He prioritised short-term growth over long-term upgrades. And then Donald Trump came along to imperil both objectives.
Watch: Chinese hope for swift end to US-China trade war
Initially, Xi’s government figured the president was bluffing. Beijing’s calculation was that, sure, Trump might slap some tariffs on Chinese goods, but it’s a mere negotiating tactic – his “art of the deal” writ large. After all, past American presidents had often attacked China on the campaign trail – only to make nice while in office.
Xi’s men held it together as Trump slapped taxes of 25 per cent on steel and 10 per cent on aluminium. They figured Trump’s initial attack on US$50 billion of Chinese imports in June would satisfy Peter Navarro and other protectionist voices in the White House.
