Wednesday, 7 August 2019

‘A perfect storm’: Trump, Xi make big bets in trade war that may backfire

For Trump, the bet is that a hard-line stance on China will help him win another four years; the political calculations for Xi are harder to grasp, given the secretive nature of the Communist Party
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International News: When Xi Jinping first met Donald Trump back in 2017, the Chinese leader said they had “a thousand reasons to make the China-US relationship a success, and not a single reason to break it.”
Two years on, ties are at their lowest point in decades — and they appear to be worsening by the day. Trump’s threat to raise tariffs on all Chinese goods last week shattered a truce reached with Xi just weeks earlier, unleashing tit-for-tat actions on trade and currency policy that risk accelerating a wider geopolitical fight between the world’s biggest economies.
A big part of the problem is that neither leader believes the other is serious about making a deal: China sees Donal Trump as posturing ahead of the 2020 election, while US officials think Xi is looking to wait him out for a better deal. Either way, the political space for compromise is diminishing as hardliners take center stage, prompting investors to weigh the potential economic fallout.
“We are looking at a situation now that is a bit of a perfect storm,” said Dennis Wilder, former senior director for Asia on the National Security Council who is now at Georgetown University. “Both have a great deal to lose in this high-stakes poker.”
For Trump, the bet is that a hard-line stance on China will help him win another four years in the Oval Office. His administration has proudly trumpeted what it calls the most robust response in decades to a rising China, and most Democratic candidates agree with the need to stay tough on Beijing even if they don’t agree with Trump’s tariffs..

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