This story just in from The New York Times
Beyond tariffs, trade
hawks within the Trump administration are pursuing what they call decoupling, or breaking up a relationship that they now
feel poses a long-term strategic threat to the United States. The trade hawks
hope to get American companies to shift their factories to friendlier countries. They
are pushing to restrict Chinese investment in the United States and
cut academic and other bonds.
Now
many people in China are wondering what will happen if the countries decouple.
They question whether the country can continue its miraculous rise as borders
and barriers go up.
“From
the day we were born, my generation has always seen the country’s economy
heading for the better,” Feng Dahui, an early Alibaba employee and an internet
entrepreneur in the city of Hangzhou, wrote on his timeline on WeChat, the
Chinese social media service, on Monday evening.
“We’ve
experienced the internet revolution and enjoyed the benefits of globalization,”
he continued. “Now this type of optimism seems to be deserting us. Everything
seems to be ending abruptly.”
Their
concerns are unlikely to sway the Chinese government. Most political analysts
believe that the only effective pressure will have to come from
within the Chinese Communist Party’s leadership, and official voices have
been uniformly strident. Negative commentaries have been stricken from China’s
heavily censored internet.
Still,
some entrepreneurs are expressing their worries.
Xiao Yu
said the e-commerce business he founded, OFashion,
which sells luxury goods from Europe and the United States to Chinese
consumers, saw growth slow in the second half of last year partly because of
the trade war. While only about 10 percent of its merchandise comes from
American brands like Michael Kors or Coach, the trade war has hit China’s stock
market and hurt consumer confidence.
The
trade war could jeopardize his dreams of raising money from American investors
and perhaps even taking his start-up public on an American stock exchange, he
said.
“As an entrepreneur, our
fate is tightly bound to the country,” Mr. Xiao said. He hopes and is confident
that the two countries can reach a deal.
“China
and the U.S. don’t have to have strained relations,” he said.
Many
also appear worried that the trade war and the government’s tightening control
over the private sector could halt or even reverse its progress. In a country
only a couple of generations removed from starvation, the possibility doesn’t
seem far-fetched to many. One 2017 post online, called “A Guide to Eating Tree
Bark,” described how people in the Chinese region of Inner Mongolia survived
during the starvation of the Great Leap Forward. It has recently gone viral
again, with more than 100,000 page views.
The two
sides have plenty of reasons to distrust each other. The United States blames
China for heavy job losses, theft of corporate secrets and cheating at the
rules of global trade. China credits the hard work and sacrifices of its people
for its success and sees the trade war as driven by American fears of a
prosperous Chinese nation.
But the
doves in China say both sides benefit from the relationship more than they
admit. Foreign investors were early backers and inspirations for Chinese
internet giants like Alibaba and Tencent, for example. And many American
companies and investors have profited handsomely from China’s rise.
Those
hoping for a deal worry that the Chinese government has fundamentally misjudged
the Trump administration. At three top-level economic and monetary meetings in
April, an economist at a Chinese investment bank said, government officials
sent the signals that the leadership was optimistic about a trade deal.
Some
people are resurrecting old articles online about the Chinese-American
relationship that are now going viral. One of them was a January speech by Li
Ruogu, a former chairman of the Export-Import Bank of China and former deputy
governor of China’s central bank. Mr. Li argued that many Chinese, including
some senior officials, didn’t realize that the relations had shifted
fundamentally. The conflict wasn’t about the United States being threatened by
China’s growth, he said, but by its vision of state-led capitalism.
“This
is the conflict of systems,” he wrote. “It won’t end easily.”
Another
popular, and subsequently censored, article had the headline “The Reasons
Behind the Chimerica Breakup,” recalling the portmanteau coined by Niall Ferguson and
Moritz Schularick. The popularity of the article, whose author is anonymous,
reflects a growing realization that the two countries’ conflicts go beyond
trade and may not have an easy solution.
The article argues that China’s system of low
human rights-based mercantilistic state capitalism negatively affected the
pricing and wage structures in the United States and other developed economies.
Now the United States wants China to change its economic growth model, the
author argued, while China only wants to buy more American products to solve
short-term trade imbalances.
“Chimerica
parted ways on May 10,” the author wrote. “Now it’s time to decide whether to
adopt the U.S. rules or the Chinese rules.”
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