Gordon Chang: Xi Jinping is 'boxed in' by tariffs and hostile environment

Xi Jinping's Political Conundrum

• 🇨🇳 Xi Jinping has created a political climate in Beijing where only the most hostile responses are deemed acceptable, effectively boxing him in.
• 💡 While coming to terms with President Trump quickly would be the most economically rational move, Xi is unlikely to be able to do so.
• 📉 This situation leaves China with no good solutions, potentially leading Xi to damage the Chinese economy by avoiding economically rational decisions.

Historical Tariff Negotiations

• 🇺🇸 In 2018-2019, China initially dismissed the first set of tariffs ($50 billion) but engaged when the US ramped up pressure.
• 💰 During that period, China absorbed 75-81% of the cost of US tariffs and is attempting to do so again with new tariffs by weakening its currency and increasing exporter subsidies.
• ⏳ However, China has less financial capacity this time, making it uncertain if they can withstand the pressure as long as they did previously.

Potential Chinese Countermeasures

• ⚡ Reports suggest China may front-load economic stimulus to counteract tariff impacts.
• ⚠️ China might attempt to intimidate the US with export bans on rare earths, but historical precedent (e.g., 2010 against Japan) suggests these efforts are unlikely to be successful or sustainable.

Prospects for a Trade Deal

• 🤝 While both sides may seek a trade deal, the US may be wary, as China violated the phase one trade deal in January 2020.
• 📉 The author suggests President Trump is unlikely to be