Over a Barrel

Over a Barrel

Several recent posts have raised the question, what is the Chinese strategy in the current trade war? I have offered my views and commented on those of Paul Krugman and Thomas Friedman. Today, Morning Joe weighed in, prognosticating that in the next few months, Xi Jinping will use his negotiating strength and Trump’s negotiating weakness to cut a really good deal—from China’s perspective.

I disagree. I do think Xi might be tempted by a deal so transparently one sided that it would expose Trump, even to those of the meanest intelligence, as a weak, incompetent charlatan, and thus cost Trump reelection.

But I do not believe Xi will be tempted by a deal that leaves Trump any wiggle room to claim victory and thus to escape the consequences of his own folly.

Here is why I reach that conclusion. Some people are obnoxious, but you can do business with them. Others, you cannot do business with. Mainly because, if you reach a deal, the deal with not stay pinned down. They will enter into a contract to sell Blackacre for a million dollars—and then demand a hundred thousand more at the closing.

I believe Xi wants, and desperately needs, Trump to lose in 2020. Because if he wins, any deal that Xi does in 2019 or 2020 will be up for renegotiation in 2021.

For several millennia, Chinese statecraft has consisted mainly of understanding the barbarians and manipulating the barbarians. They are still at it today.

China has a strong motive to create a recession that will cost Trump the election. It has the means to accomplish this result. And Trump has offered China a wonderful excuse to use its abundant means in support of the goals that motivate it.