China Notes the Approaching TrumpageddonPosted: February 24, 2016
Drudge leads with this today:
Which links to this article at the Washington Free Beacon. Basically, a Chinese official spokesman said that the US shouldn’t do anything to upset the world economic order, presumably referring to the general Chinese position that the U.S. raising tariffs as a response to China’s devaluation of the yuan would be a Bad Thing — without naming Trump as the source of this proposal. Big surprise. China’s in a very tight spot — a very, very tight spot.
Beijing has been running the money printing presses on overdrive for months, trying to pump liquidity into an economy that is turning to thick sludge while, at the same time it’s been springing leaks left and right in terms of capital flight. In other words, the brilliant minds who make Chinese economic policy (once so beloved by Paul Krugman and the other geniuses at the New York Times) have had to ditch their grand plan to rebalance the Chinese economy from one premised on producing cheap exports to one based on internal demand and services. This is what they’d like to be doing, by their own admission. But the boat not only won’t steer, it’s sinking.
To the extent there is any demand out there at all for Chinese exports (and, compared to just a year ago, there’s not much), continuing on the course of being an export manufacturer is the only thing that can generate foreign exchange right now and for the foreseeable future. If the Trumpocalypse were to occur and he were actually able to do the Smoot-Hawley thing, it would be a torpedo below the waterline for the Chinese economy.
So Beijing is basically saying “Hey, we’re both in the same sh!tstorm — you sink me and we both go down!” They’re probably right. But just in case we don’t get the message, there’s this: Another Piece of the Puzzle: China Builds New Radar Facilities in the Spratley Islands.