Experts: China on Losing End of Trade War

By Margaret Wollensak

President Trump has accused China of delaying trade talks in hopes that he will lose the election in 2020. He thinks China wants to deal with someone more willing to compromise.

David Yeliang Xia, Former Professor of Economics at Peking University, told NTD, “China is very deaf on anything they would not like to accept. Donald Trump’s got the lesson and experience, so he will try hard to push the Chinese side to accept. If not, then the tariff retaliation would be worse.”

U.S. President Donald Trump (L) and Chinese President Xi Jinping (R) walk together at the Mar-a-Lago estate in West Palm Beach, Florida, April 7, 2017. (JIM WATSON/AFP/Getty Images)

The two countries traded tariffs on each other’s goods in quick succession last month. Earlier this week, the U.S. announced trade talks with China are set to resume in October.

At the same time, Trump warned China that if it continued to delay and he wins in 2020, he will drive an even harder bargain.

Yeliang Xia says that even if Trump loses in 2020, he does not think China will get off easy.

Yeliang Xia said, “I think the Congress, business and academics, they all think China is trying to challenge the existing order of the world. They try to change the rules and orders of the world. That’s something that they can not be allowed to do.”

On Friday, China’s central bank announced it is decreasing the amount of cash that banks must hold in reserve, an effort to aid its struggling economy.

Yuan and dollar
A stack of U.S. dollars together with stacks of 100 Chinese yuan notes at a bank in Hefei, east China’s Anhui province on March 9, 2010. (STR/AFP/Getty Images)

Chinese are also having trouble paying their debt. According to the data from one of China’s biggest rating firms, private bond defaults reached $4.5 billion through August. This is a record high and exceeds the $3.8 billion for 2017 and 2018 combined.

Victor Shih, Associate Professor at UC San Diego School of Global Policy & Strategy told NTD in an interview, “The debt level of Chinese companies continue to rise pretty rapidly, which means that many firms are now trapped into a scissors between declining per-unit revenue and high debt, and all the interest payments you have to pay if you have high debt.”

Trump has predicted that China’s economy will crumble if the two countries do not reach a trade deal by 2020. Steve Moore of the Heritage Foundation agrees and says China’s economy could implode if a trade deal is not made soon.

Stephen Moore, Distinguished Visiting Fellow at The Heritage Foundation, said, “If this doesn’t get resolved in the next year, this could drive China into its first recession in thirty years.”