The Chinese Communist Party’s policies created tremendous economic imbalances, saddled China with debt, and bred suspicion and disillusionment among trading partners. Even before 2016, many observers believed China was headed toward stagnation.
It’s against this context that the Trump trade policy has put such pressure on Beijing. The first wave of U.S. trade actions was announced in March 2018, and included strategic tariffs on Chinese products, restrictions on investment in several key industries, and a World Trade Organization case challenging Beijing’s institutionalized theft of technology and intellectual property.
When Beijing refused to meet U.S. demands, the White House increased the countertariffs, dealing another major blow to the Chinese economy. While trade talks will continue, Mr. Trump has now announced that the U.S. will impose a 10% tariff on an additional $300 billion in Chinese goods beginning Sept. 1.
The tariffs are working. Big tech companies are taking their manufacturing out of China; retailers are pulling out as well. The Chinese National Bureau of Statistics reports that in July Chinese factory activity declined for the third month in a row. That means fewer jobs. The South China Morning Post recently reported that economists at China International Capital Corp. , an investment bank, say China’s industrial sector has lost five million jobs in the past year, nearly two million of them because of the trade war with the U.S.
Exports so far this year have increased only 0.6% while imports, an indicator of domestic economic strength, fell at a 5.6% annual rate in July, according to China’s General Administration of Customs office. The U.S. Census Bureau reported last week that China dropped from being the top U.S. trading partner to third behind Mexico and Canada for the first half of 2019.
I love foreign trade, but not so much when it’s with thieves with imperial ambitions.