Scholar at Tsinghua University Explains Why China Could Lose Big in a Trade War, Online Post Gets Censored

Yuan banknotes and US dollars are seen on a table in Yichang, central China's Hubei province on August 14, 2015. (STR/AFP/Getty Images)
Yuan banknotes and US dollars are seen on a table in Yichang, central China's Hubei province on August 14, 2015. (STR/AFP/Getty Images)

Trade tensions between the United States and China have escalated in recent weeks. Last week, President Donald Trump announced tariffs valued up to $60 billion on Chinese imported goods. In response, the Chinese regime has hit back with a soft blow, announcing $3 billion in tariffs on American imported goods.

However, China is compromising because the Communist regime knows clearly it has no way to win the trade battle. Officials from both sides have begun private negotiations, while Chinese ambassador to the United States Cui Tiankai said in a recent interview with Bloomberg that China was willing to work with the United States to reduce the trade deficit.

Its state-run media, meanwhile, has talked big about forceful retaliation measures.

Sun Liping, a professor of sociology at Tsinghua University and former mentor to current Chinese leader Xi Jinping, recently published an article on the popular Chinese social media platform, WeChat, about the trade war between the United States and China. Sun was on the academic committee to evaluate PhD candidates’ dissertations during the same time period that Xi was pursuing a PhD at Tsinghua.

He said straightforwardly in his article that China cannot afford to fight back and predicted China will make a huge compromise with the United States. The post had more than 100,000 viewers within three days before it was deleted from WeChat.

He said China heavily relies on imports such as advanced technology products from the United States. “Our foreign [currency] exchange mostly comes from the U.S. Without these foreign exchange, the necessities like food, oil, and microchips cannot be imported.”

As for America, he explained that it has natural resources within its own borders that sustain the country’s people. In addition, it has many allies around the world, which can provide markets even if it leaves China’s. “But we [China] cannot afford that,” he said frankly.

“It the trade war fights to the extreme, it will at most harm the U.S. economy seriously,” he pointed out. “But for us, it’s an issue of survival.”

A longtime Chinese blogger who frequently comments on domestic economic news, using the pseudonym Manzu Yongshi, also recently published an article analyzing why China can’t afford to have a trade war with the United States. Citing Chinese customs data, he provided numerical evidence of China’s heavy reliance on American goods, especially in the areas of transportation vehicles, food commodities, and medical devices.

The blog post was soon deleted by Chinese censors as well.

Another blogger, writing under the pen name, Ganwu Shenghuo, said he has worked in the central government for many years. He wrote an article debunking retaliatory measures that have been touted in state media. He believed the state media articles were written merely to influence Chinese public opinion. His blog post was soon blocked, too.

One strategy mentioned in state media is for the Chinese regime to sell off huge amounts of U.S. Treasury bonds. But he said China has no other options but buy U.S. Treasury bonds because it is the safest investment with high profit for the Chinese regime. On the other hand, if China sells large numbers of U.S. Treasury bonds in a very short time, prices would drop rapidly. Americans could buy the low-price bonds sold off by China and get extremely high profits.

Another argument is for China to stop importing soybeans from the United States. However, the regime will then have to import them from other countries at high prices. He predicted that when the price of soybeans rises in those countries, other purchasers would likely go buy soybeans from America instead—foiling China’s plot.

From The Epoch Times

Written by Sunny Chao

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