If we can all stick it out, we may just win this trade battle with the rapacious Chinese. In any case, by some reckoning we are putting the red giant in a very precarious position and they’ll HAVE to change policy soon or they’ll break.
Commentator Kevin Jackson recently received a letter from an American friend of his who has been living in China for several years. This friend says that China is really feeling the pinch of Trump’s moves to prevent China from cheating on trade.
Up to now, China has led its international trade policies with impunity. It buys its way into markets — instead of earning its way with proper and fair dealing — and lords over markets undercutting everyone because they are often heavily subsidized by government. But Trump is showing the flaw in that policy.
However, Trump has forced them to look at their practices differently. And because they have not yet conceded, they are losing business and jobs by the thousands and are on the verge of a major recession — something they have never had to deal with before and may not understand how to address.
One telling thing has been the recent celebration of the Chinese New Year, Jackson’s friend said. Jackson’s friend writes:
For example, Chinese New Year just ended. Normally it lasts at most 2 to 3 weeks tops. Because everybody must return to work. However, this New Year started the last week of January, but it continues as the whole month of February everything has been shut down. There are NO FACTORY ORDERS. Layoffs!!
One thing China just did to try and address their problem is to revise their Wholly-Owned Foreign Enterprise (WOFE) rules. This will make it a bit easier for foreign companies to come into China to set up businesses. Until now, China has been very hard on outside companies. That may be changing, and it’s about time.
Jackson’s buddy thinks that China is headed for some major problems unless it bends to Trump’s demands.
My prediction for China is a BIG Recession coming soon. And when that recession hits, they won’t know what to do. For the most part, China has never had a recession since the new government came to power.
You might be surprised to learn that most of the foreign companies are getting out of China; heading to Vietnam and Thailand.
Jackson’s buddy also noted that the Chinese military isn’t all it’s cracked u to be, either. Its soldiers are soft and filled with the “one-child policy” kids who are so fat and arrogant that they don’t make good soldiers. But it’s all China has to rely on at this point.
In any case, it looks like China is closer to cracking than we are. Plus, they seem poised to prove they are less resilient that we are in dealing with down times because they have never had to deal with a down market in their modern era.
Trump is winning this trade battle, folks. Don’t let the nay sayers tell you different.
Follow Warner Todd Huston on Twitter @warnerthuston.