China: Playing the long game in tariff war…

This week, we’ve been highlighting China’s 9 Principles for Replacing America as the Global Superpower

  1. Don’t provoke a powerful adversary.
  2. Turn your opponent’s house on itself.
  3. Be patient to achieve victory.
  4. Steal your opponent’s ideas and technology.
  5. Target an enemy’s weak points rather than relying on an accumulation of brute strength.
  6. Beware political states that have a dominant influence or authority over others.
  7. Deceive others into doing your bidding for you.
  8. Establish and employ metrics for measuring your status relative to other potential challengers.
  9. Maintain a deeply ingrained sense of paranoia.

Note these principles are excerpted from a book titled  The Hundred Year Marathon: China’s Strategy to Replace America as the Global Superpower by Michael Pillsbury.

Quite an appropriate title given CNBC’s observation regarding the current escalation in the tariff dispute.

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Let’s dig a little deeper…

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According to CNBC

Eighteen months into the trade battle with President Donald Trump, China has come to terms that it’s fighting a forever war as conflicts have spread well beyond trade.

The time horizon may  go well beyond the life cycle of the current U.S. administration.

China is preparing for a battle that could be as long as the U.S.-Japan trade war in the 1980s that lasted more than a decade.

More specifically, China is:

  • Accelerating efforts in other countries to reduce its reliance on the U.S.
  • Strengthening its domestic market by improving its internal distribution infrastructure, e.g accelerating the development of chain convenience stores.
  • Welcoming US businesses such as Tesla and Costco.

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The bottom line: Don’t expect China to budge much on the  issues that the Trump administration considers crucial:

  • cyber intrusion into U.S. business networks
  • forced technology transfer
  • intellectual property theft
  • currency manipulation

It’s going to be a long slog.

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