Gordon Chang: China's Trade War Strategy is Unsustainable and Lacks Foresight

China's Economic Weaknesses

• 📉 China's reported 5.4% growth is deemed ludicrous due to March data showing a deflationary spiral, with CPI down for two straight months and PPI down for 30 straight months.
• 🏦 The country is facing a debt crisis, described as a slow-motion version of the 2008 crisis, exacerbated by a collapse in property prices.
• 🚫 Xi Jinping has abandoned consumption as an economic driver, forcing China to rely on exports, a strategy undermined by President Trump closing off the world's largest consumer market.

US Trade Strategy and China's Isolation

• 🤝 China's attempts to unite other nations against U.S. tariffs have met with weariness due to their history of coercive economic behavior.
• 🌍 The U.S. is negotiating with over 70 countries to limit dealings with China in exchange for tariff reductions, aiming to isolate China economically.
• 💡 The narrative that China will lead a global economy is challenged by common sense, given other countries' similar or worse problems with China's predatory trade practices.

Critical Minerals and National Security

• ⛏️ President Trump is investigating tariffs on all U.S. critical mineral imports following China's curb on rare earth mineral exports, which are vital for U.S. defense.
• 💰 Corruption at the top of China's political system is highlighted, with reports of Xi Jinping's family holding significant investments in rare earth mining plants.
• 🇯🇵 China's 2010 embargo on Japan for rare earth minerals collapsed within months as Japan found ways around it, suggesting China's current export ban may also be circumvented.
• 🇺🇸 The U.S. has options, including opening federal lands for rare earth mining and processing, and exploring resources in Saskatchewan, Canada.

Impact on Global Industries

• ✈️ China's directive to Chinese carriers not to take delivery of Boeing orders hurts Boeing's immediate cash flow but is unlikely to significantly impact them long-term, as planes can be sold to other markets like India.
• 🛫 If China doesn't buy Boeing planes, they might buy from Airbus, potentially creating a backlog that allows Boeing to sell to Airbus's existing customers.
• 🔧 A potential embargo on parts sales to China could lead to many planes in China being grounded, indicating a lack of foresight in their strategy.