Epoch Times published a commentary article titled, “Is the Trade War a War to Fight for the Fate of China or a War That Will Lead to the Devastation of the Chinese Communist Party?” Below are some highlights from the article.

Since the trade war started, the U.S. economy has shown positive signs: the stock market is stable; the U.S. currency is appreciating; the Republicans and the Democrats have a consensus on U.S. China policy.

Compared to the U.S. which is calm and united, China appears to be more chaotic. So far this year, it has had the worst stock market performance in the world. In the first six months, the market dropped down 17 percent. The Chinese currency exchange rate suffered a major decline, indicating a lower confidence in China’s economy.

The top leaders in China have also been sending inconsistent messages to the media. The latest statement that the central administration made showed a completely different position form that of the official media, which vowed to “strike back firmly” and take a hardline stance of “an eye for an eye, and a tooth for a tooth” in the trade war against the U.S. Chinese premier Li Keqiang stated on July 7 that China will not change its determination to reform and open its market. It was consistent with Xi Jinping’s previous statement of “taking caution when dealing with the trade war to avoid derailment on the path to reform.” However while it promised that, before the end of June, it would open up the market further for multiple industries, China was reported to be making it more difficult for U.S. goods to clear Chinese customs. Meanwhile the tone of the Chinese official media also changed from statements such as “The U.S. is bound to be defeated,” “We will fight back at any cost,” “The Rise of the Great Powers,” to statements such as “Hide one’s talents, and bide one’s time while waiting for the right opportunity,” “The New Cold War,” and “Fight for the fate of the nation.” The shift in the media can also be seen in articles that People’s Daily published calling to stop the boastful writing styles in the media.

No matter how chaotic it appears, one thing is clear: Beijing has come to realize that the U.S. is serious this time. The trade war is escalating into a comprehensive, sustained confrontation.

The U.S. demands fair trade from China but the current Chinese Communist Party ruling system is incapable of meeting the demand. It might appear that the war is between two countries, but what China is really fighting for is to maintain the power of the ruling Communist Party and to keep it from collapsing.

There are three obvious economic crises that China faces: the Chinese Currency Bubble (Over-supply of Money Issued); the Real Estate Bubble; and the Debt Bubble.

The trade war will not only cast a shadow on China’s economy; it will put pressure on China to resolve its currency, real estate, and debt crises. It is pushing Communist China toward a dead end. If it does not reform, pressure from the trade war will burst the economic bubble and China’s economy may collapse. If it undergoes reform, it will touch the interests of the privileged class which may result in an internal collapse of the political system. In either case, the Chinese communist party will face devastation.

Source: Epoch Times, July 10, 2018
http://www.epochtimes.com/gb/18/7/10/n10552044.htm

On July 6, the U.S. launched a 25 percent tariff on $34 billion worth of imports from China. Hong Kong hk01.com published an article on an interview it had with a Chinese official who works in the foreign diplomacy department and chose not to be identified. The official conveyed a very different message from the official Chinese media. It could be an indication that Beijing wants to change its position in the Sino US trade War. Below is a summary of the statement the official made during the interview.

Beijing reached a consensus internally long ago that the Sino-US trade war was inevitable and that Sino-US relations will enter an unprecedented period of tension. Since the 18th Congress, China’s internal and external policies have shown that China hopes to enhance its international status and increase its international influence. It has used a certain approach that has violated the existing economic and security practices that the U.S. has established. The U.S. has made frequent diplomatic accusations.

Xi Jinping clearly understands the gap in which China lags behind the U.S. and that the U.S. is the only superpower in the world. However, some officials and media have misinterpreted Xi’s intention. Xi never wanted to change the foreign policy of “hide our capabilities and bide our time” left from the Deng Xiaoping era. Two proposals that Xi made were based on his assessment of China’s current situation: the first was that, “the Pacific Ocean is big enough to accommodate both China and the U.S.” and the second was the “one belt one road project.” Xi made the first proposal and wanted the U.S. to understand that China has no intention of threatening the U.S. position in the Asia Pacific region. The second proposal was meant to fix the excess domestic capacity and create more job opportunities for the Chinese people. However there are a considerable number of officials within the Chinese government and some of the Chinese Communist Party’s media who misinterpreted the central strategic intentions. They interpreted that first proposal as if Beijing wanted to be equal to the U.S. and challenge the U.S. dominant position in the world. The official media took the second proposal and widely promoted nationalism and populism in China. This caused an unrealistic expectation among Chinese officials and the general public. The official also blamed the western media for capitalizing on the opportunity. They widely publicized the nationalism and populism trends and caused China’s image to suffer a big loss in the international community. In summary the current Sino-US relationship resulted from the officials misinterpreting the central government’s intention, making improper judgments, and issuing improper instructions. The media then publicized the populist sentiments. The article that People’s Daily recently published was meant to correct the hyperbolic and boastful writing style that the official media have used.

As to the future of the Sino-US relationship, China will continue to maintain reasonable and polite diplomacy with the U.S. It will find different channels so as to establish a unilateral solution to minimize the negative impact to China’s domestic economy, serve China’s national interest, and fight for the interests of the Chinese people.

Source: Hk01.com, July 10, 2018
https://www.hk01.com/%E5%88%86%E6%9E%90%E8%A9%95%E8%AB%96/207705/01%E5%B0%88%E8%A8%AA-%E4%B8%AD%E5%85%B1%E5%AE%98%E5%93%A1%E8%A9%B3%E8%A7%A3%E4%B8%AD%E7%BE%8E%E8%B2%BF%E6%98%93%E6%88%B0-%E7%BF%92%E8%BF%91%E5%B9%B3%E5%BE%9E%E6%B2%92%E6%94%BE%E6%A3%84%E9%9F%9C%E5%85%89%E9%A4%8A%E6%99%A6

Since last Friday, People’s Daily has published a series of opinion articles on the Sino-U.S. trade war. Below are highlights from two of the opinion articles.

In the article it published on July 11, titled “Be wary of the ‘cold war trap’ that US unilateral protectionism has set up,” it attacked the U.S. “not only for seriously jeopardizing the safety of the global industrial chain and value chain, but also for hindering the pace of economic recovery. It (the U.S.) also brings the risk of sliding the normal world economic and trade pattern into trade protectionism and unilateralism in a ‘cold war trap.’” The article called out the following actions that the U.S. has taken in order to “expose the poisons the U.S. brings to international relationships.” It politicizes the trade issue; it has resumed the 232 investigation; withdrawn from the TPP, the Paris Agreement, the United Nations Educational, Scientific and Cultural Organization, and the Iran Deal; it has openly violated World Trade Organization regulations and has used the investigation results from 301 to impose tariffs on other countries; it expanded the definition of national security and frequently seizes foreign investments in the high-tech field.

In a report published on July 9, titled “The U.S. ‘Zero Sum Trade Theory’ is a kind of evil that harms the world,” it claimed that the trade war the U.S. launched against China has drawn criticism from the international community. “The zero sum trade war game that the U.S. is playing is against the law. It not only impacts Sino-US economic and trade cooperation, but also brings great uncertainty to the entire world economy.” The article claimed, “Under its zero sum mentality, ‘America First’ is evolving into extreme self-interest.” The article stated that in 2017, the trade between China and the U.S. reached US$583.7 billion. It was 233 times what it was after the establishment of diplomatic relations between the two countries in 1979. The article further claimed that, “The huge Chinese market that the world values is increasingly becoming an important business growth point and profit consideration in the global strategy of U.S. companies. … Let other countries sacrifice their own core interests to pay for the unreasonable demands of the U.S. This is a backward and outdated concept of trade.”

Source:
1. People’s Daily, July 11, 2018
http://opinion.people.com.cn/n1/2018/0711/c1003-30138897.html

2. People’s Daily, July 9, 2018
http://opinion.people.com.cn/n1/2018/0709/c1003-30133557.html