Donald Trump has been dialing up the tariffs and the rhetoric around the ongoing trade spat with China. Yet Xi Jingping has held a firm line and has been unwilling to fold to increasing pressure from the US. Donald Amstad from Aberdeen Standard Investments believes that Trump has misread how strong China's hand is by overlooking some key inputs to the trade relationship between the two countries.
While most of the focus has been on traded goods Amstad says to get the full picture you also need to take into consideration the value of services and the profits earned by US companies operating in China. As he outlines in this short video Trump may have badly misread China’s hand.
“In China there is no political cycle. President Trump has got 15 months to sort this out before he faces re-election. So, time is very much on China’s side.”
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Quite illusory video in many ways. The “trade war” as the media headlines love to characterise is much more about stopping China’s ongoing march to Asian hegemony rather than any financial or trade matters. These are sideline issued when considered by the US foreign policy. The discussion regarding services and foreign companies operating in China must be a new way to look at trade balance as far as I can see. Does he include HSBC as a Chinese company with billions of profit around the world or Huawei or Alibaba? Do we now need to qualify balance of trade by looking at Chinese government investment in Africa, The Phillipines etc etc to quantify “fairness “ of trade. Remember there are very few Chinese companies independent of Chinese government control. What if Trump gets a second term …he certainly has the ammunition to discuss democracy and fairness to the American people in comparison to China. I think Mr Amstad’s view from China( Hong Kong) very much underestimates the Foreign Policy of the US.
Would be interesting to see the stats backing up the claim that the balance of services in favour of the US largely negates the goods deficit with China. Not sure this is correct.
Donald...I think you could have shown a little more support for your American namesake ! And I disagree with you entirely. America can always print dollars ! China is broke ! This so called trade war is only a skirmish but Trump will prevail because China MUST have the trade with America while America can successfully trade with the rest of the World. I tend to agree with HARRY and MARK. Sorry to 'gang-up' on you ! Regards , Trevor.