BJ: After the US midterm elections: Where is China heading next?

BJ: Yesterday the Beijing office, together with the other Nordic Chambers, invited Co-founder of Trivium China, Andrew Polk, to discuss US and Chinese relations after the US midterm elections.

Since this summer, said Polk, the trade war has entered a new, deeper, and protracted phase. From the US side the dissatisfaction with China is unanimous, which means that the US midterms elections is likely to have little impact on the trade war. The Trump administration sees a depreciating CNY and a falling stock market as a sign that China is on the brink of economic collapse and that they have the upper hand in the trade war. This however, according to Polk is an over-estimation of its own leverage.

From the Chinese side trade issues was originally the key focus of the negotiations, but seems now to have less priority than before. Now the Chinese leaders does not seem to be too worried about trade and think that they have the upper hand politically and can outlast Trump. “So far, they have not felt any real pain. Once it goes in to tech, investments etc. then it is a different story. The key, however to remember is that China does not want this war”, said Polk.

“So far, they have not felt any real pain. Once it goes in to tech, investments etc. then it is a different story,Andrew Polk

One thing is certain, there is no a quick fix to the trade war, as deeper structural issues needs to be addressed. “The Trump administration wants a concrete set of deliverables on Made in China 2025 to even restart the trade war talks, which is very unlikely to happen as Chinese leaders now sees the trade war as part of a concerted long-term effort to thwart China’s rise, and therefor wary to come to the negotiating table at all”, said Polk.

So far there are few genuine macro effects caused by the trade war. Before anything happens, predicts Polk, both sides will need to feel some genuine pain for anything to change. “Even if a deal is made in one month, or in 6 months, it is only going to be a pause in the trade war, not the end of it, because we have not since any real pain yet.”

“If a deal is made in one month, or even in 6 months, it is only going to be a pause in the trade war, not the end of it, because we have not since any real pain yet,” Andrew Polk

Leave a Reply

Your email address will not be published. Required fields are marked *