It sure feels like things may be starting to spiral out of control on many fronts…
The China events I am following today include:
Xi's Heilongjiang tour continues, while the full propaganda rollout and the follow-on exhortations to study his comments have not yet begun;
A key theme of the tour is that the trade war is forcing China back on the road to self-reliance 自力更生;
The State Council released a five-year plan for "rural vitalization";
President Trump is accusing China of meddling in the upcoming US election.
In April in comments about the U.S. smackdown on ZTE I wrote:
While the company may end up crippled, the episode has strategic and propaganda value for Beijing. The timing of the announcement — right before the 2nd anniversary of an important speech on cybersecurity and technology made by Chinese President Xi Jinping — only serves to strengthen the point he's been making about the need to reduce reliance on foreign, and especially American, technologies.
Now that Xi and the CCP system have decided that America’s real goal in the trade war is to "thwart China's rise" we are starting to see a rollout of official reactions, with self-reliance as the key theme.
Many observers may dismiss as impossible PRC attempts to wean itself off US technology, imports and markets. Those people may be right in the end, though I am wary of betting against the PRC succeeding. Regardless, we should expect the PRC under Xi to use all means at its disposal as it tries.
Even in the unlikely event there is some sort of short-term trade deal over the next few months the Chinese side will only view that as a delaying action while they work increasingly hard to wean themselves from as much dependence and reliance on the US as possible.
Trump and at least some his top advisors appear to have a similar goal when it comes to weaning the US off of China.
Trade is just one dimension of the much broader and intensifying US-China friction. Earlier this morning President Trump said at the UN Security Council:
Regrettably, we found that China has been attempting to interfere in our upcoming 2018 election coming up in November against my administration...
They do not want me or us to win because I am the first president ever to challenge China on trade..
We are winning on trade. We are winning at every level. We don't want them to meddle or interfere in our upcoming election."
The fundamental assumptions around the US-China relationship look to have been irreparably shattered.
Are you ready for the New Era of US-China relations?
Thanks for reading.