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Commentary: Xi Jinping is readying China for a long, brutal trade war

Chinese president’s state apparatus could help him to outlast Trump, says the Financial Times' Tom Mitchell.

Commentary: Xi Jinping is readying China for a long, brutal trade war

Chinese President Xi Jinping raises his glass and proposes a toast at the end of his speech during the welcome banquet at the Great Hall of the People in Beijing, China on Apr 26, 2019. (Photo: Nicolas Asfour/Pool via Reuters)

BEIJING: As the trade dispute escalates between China and the US, classic Chinese movies about the War to Resist America and Aid Korea, as the Korean war of the 1950s is known in China, have made a reappearance on Chinese primetime state television.

This is one of the many signs in China hinting at what analysts believe will now be a protracted trade conflict with Washington. 

Reluctant to accept humbling terms demanded by Donald Trump to end the two countries’ year-long trade spat, Xi Jinping, the Chinese Communist president, is preparing to lead his country into an all-out trade conflict with the world’s leading economic and technological power, just as Mao Zedong sent Chinese “volunteers” to take on US forces during the Korean war for four long, bloody years in the 1950s.

“If the bulk of this agreement is about China doing this and China doing that, that’s totally unpalatable to a domestic audience,” said one person briefed on the talks in Beijing.

Like Mao’s decision to enter the Korean conflict, Mr Xi’s choice seems at first glance a foolhardy one. 

A soldier unfurls the Chinese national flag as it is raised in front of the giant portrait of Chairman Mao Zedong in Beijing's Tiananmen Square October 15, 2007. (Photo: REUTERS/David Gray/Files)

Sixty years ago, Mao’s poorly equipped troops faced a technologically superior American military force in Korea. Today China’s economy is far more dependent on exports to the US than the US is on exports to China. 

After 30 years of near double-digit growth, the world’s second-largest economy is also entering a period of slowdown, resulting in mounting anxieties within the middle class and private entrepreneurs over social mobility and Xi’s emphasis on state enterprises. Meanwhile, the US economy accelerates.

But just as Chinese forces ultimately fought the US to a stalemate in Korea by pitting sheer troop numbers and a far greater tolerance for mass casualties against superior American firepower, Mr Xi reckons he can direct a successful, society-wide struggle in the trade dispute.

READ: Here’s why the US-China trade war won’t cool down anytime soon, a commentary


Chinese officials believe they have two distinct advantages vis-a-vis their US adversary in the next phase of the trade war. The first is the levers of control that Mr Trump can only dream — or tweet — about. 

US institutions such as the Fed or the House of Representatives have resisted the US leader’s pressure, but Mr Xi need only snap his fingers and China’s government, legislature, media and banking system will do his bidding. 

Mr Trump, his treasury secretary and his chief economic adviser routinely try to “talk up” US stock markets. The Chinese Communist party has a “national team” of state-owned brokerages, banks and corporate giants at its disposal to “buy up” China’s markets when necessary. 

U.S. President Donald Trump takes part in a welcoming ceremony with China's President Xi Jinping at the Great Hall of the People in Beijing, China on Nov 9, 2017. (File photo: REUTERS/Damir Sagolj)

When the Shanghai Composite Index slumped almost 6 per cent to 2,906 points on the day after Mr Trump’s latest trade-war escalation, people briefed on the Chinese government response said the national team was told the “line in the sand” was 2,900. The next day the SCI rebounded. 


Mr Xi’s second advantage is a long-simmering sense of historical grievance against foreign powers who have previously “bullied” and “humiliated” China — conveniently stoked, as it happens, by the party’s media mouthpieces.

When the Trump administration’s opening trade-talks demands were leaked in May last year, the outrage many Chinese people felt was genuine. 

READ: Huawei security concerns cannot be divorced from US-China relations, a commentary

Friedrich Wu, a professor at Nanyang Technological University in Singapore, sums up the feelings of many when he describes them as “a list of surrender demands for China to acquiesce to”.

“It’s a (reversion) to the 19th century when western and Japanese powers dictated all the terms in their humiliating unequal treaties with a feeble Qing dynasty,” he says. 

If there is a decoupling between the two economies, so be it. The Chinese people can endure more pain than the spoiled and hubristic Americans.

Mr Trump, meanwhile, must contend with powerful constituencies — farmers, Wall Street, retailers, consumers and a free media among others — who complain loudly about the cost of his tariffs on Chinese imports and doubt the wisdom of his strategy.

Source: Financial Times/nr(sl)


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