Because China thinks they win (however) the challenge of duties with the USA
Beijing could reduce rates against the rest of the world and increase subsidies. With the risk for the other markets, starting from the European one, to be invaded by Chinese goods at competitive prices
« If China does not collect 34 percent rates by April 8, 2025, The United States will impose additional rates of 50 percent to Chinastarting from April 9th», The US president wrote on social networks Donald Trump. So it happened: China must therefore face cumulative rates of 104 percent, including those already in force of 20 percent, those of 34 percent made known on Wednesday and the further 50 percent.
Just before the last announcement, theEconomist However, he had published a item entitled « Because China thinks they can win a commercial war with Trump »certainly useful for understanding why Beijing decided to respond to a hard muzzle – «We will fight until the end» – At the rates announced by the American president on April 2 (Paolo Salom wrote about it here). « Trump – writes the British weekly – asks his geopolitical rival very much, including stem the flow of precursors of the Fentanyl (the opioid that caused thousands of deaths from overdose in the USA, editor’s note) And help to end Russia’s war in Ukraine.
The American president also revealed that he did not want to be responsible for the closure of Tiktokan application of Chinese property for the realization of short popular videos among young Americans (here an analysis by Martina Pennisi, editor’s note). Teslathe electric vehicle vehicle company owned by Elon Musk, Trump’s councilor, is vulnerable to retaliationsince he carries out about a fifth of his activities in China. « It is a huge lever for the US government, unless he wonders Elon to leave”, Alicia Garcia Herrero of Natixis, a French bank says.
Chinese officials may also believe that America will not be able to endure the inflation and economic discontent caused by Trump’s duties. Instead of « fighting until the end », they may have to fight only Until American consumer prices are starting to rise or employment to decrease».
Needless to say, in this continuously raising the mail, there are great risks for both sides. And therefore for the entire world economy. « An escalation of the commercial war means that Xi Jinping will have to do more to support the Chinese economy. The potential shock was compared to Global financial crisis of 2007-2009which had requested a package of stimuli of 4 billion yuan (590 billion dollars). Li QiangPremier of XI, said in March that the country is preparing to face « larger external shocks than expected« And that is willing to implement political to guarantee economic stability. What this means in practice is not yet clear».
A possible clue comes from People’s newspaperofficial voice of Beijing, a state newspaper, which on April 6 wrote that cuts in interest rates and bank reserve coefficients could arrive at any time. The newspaper also claimed that local governments they will help exporters in difficulty finding new sources of demand at home and in non -American markets. Soochow Securities, a Chinese broker, suggested that China could reduce customs rates towards the rest of the worldwhile increasing i export subsidies. With the risk, for the other markets, starting from the European one, to be invaded by another wave of Chinese goods at prices made competitive also by state subsidies.
But there is also the risk, for theEconomistthat Xi pecchi of optimism on the Chinese possibility of winning the arm wrestling. Or that the consequences are underestimated. «Economists fear that the stimuli to the real economy will arrive with too much slownesswith fragmented and reactive nature, which will materialize only after a sharp slowdown. According to Larry Hu of the Macquarie Bank, Things will worsen before improving».
The real mail, according to the weekly, is the « Debt » from America, who so far China, while pursuing its own technological self -sufficiencyhe has always said to refuse, considering it a way for the West to punish it. «Now though – reports theEconomist – There is growing support. Some answers published today online by various well -informed commentators, suggest that China is taking into consideration the Suspension of any cooperation with America on Fenanyl. Another idea is that of prohibit imports of American poultry and other agricultural productslike soy and sorghum, which come mainly from republican states. China could also impose restrictions on American services, a sector in which Uncle Sam still has a commercial surplus (also applies to the European Union, editor’s note). This would include Restrictions on consultancy and American law firms still operating in the country. It could also put the intellectual property held by American companies under the lens. If « fighting up to the end » means aligning with any new American fare, XI will have to bite the apple of the misunderstanding « .
THE’Economist he is pessimistic about the possibility of a happy end of surprise: « There is little to do to prevent such misleading between the two major economies of the world. Although Trump’s intentions in triggering the greatest disturbance of trade in modern history are not entirely clear, it seems less interested than ever to find an agreement with China. All negotiations will be interrupted if China will impose its 34%withdrawal, has declared on its social media website, announcing the last measures. Chinese officials call it a « Error following another error« And they have not excluded the possibility of interviews. Their hard response, however, probably precludes this possibility».
If so, we will find out soon. Probably also at our expense.
