How Trump's Latest Threatened Tariffs Could Affect China And Its Leadership
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President Trump seems prepared to impose tariffs on a wide range of Chinese products worth $200 billion. That could happen as early as the end of this week. This would be in addition to the tariffs the U.S. has already imposed on $50 billion-worth of Chinese imports. NPR's Rob Schmitz gives us a look at how these trade actions will impact China's economy and its leadership.
ROB SCHMITZ, BYLINE: As $200 billion-worth of tariffs loom over China's economy, those among the Communist Party elite in Beijing are quietly grumbling about how China's leadership has handled this crisis. So says Andrew Collier, former president of the Bank of China's international division, who spoke from the streets of Beijing.
ANDREW COLLIER: Everything I've heard is that the bureaucracy in Beijing was ill-prepared to analyze the impact of a trade war and what Trump was thinking.
SCHMITZ: Collier says China's trade team was seeking advice from the wrong players, people he calls globalists, like former U.S. treasurer Hank Paulson, former secretary of state Henry Kissinger and former Goldman Sachs president John Thornton. None of these advisers were able to help the Chinese manage the intensity of Trump's trade actions against them. While this has undoubtedly led to frustration among China's leadership, there's little sign that it's impacted the authority of Chinese leader Xi Jinping.
BILL BISHOP: There's just no indication that he's weakened.
SCHMITZ: Bill Bishop curates the Sinocism China Newsletter. Over the summer, there were rumors Xi Jinping's power had diminished. But Bishop says, since Xi returned from an annual retreat for party elders, he's seemed anything but weak. He presided over a high-level People's Liberation Army meeting after demoting two powerful generals and detaining another. Then he oversaw an important propaganda work conference. As far as China's trade problems, says Bishop, most Chinese aren't pointing the finger at Xi.
BISHOP: The propagandizing around the trade dispute is around the U.S. is keeping us down. Then I think, you know, you're going to have certainly a fairly large swath of the population who are going to basically not necessarily blame Xi Jinping and the government but blame the evil Americans.
SCHMITZ: And that could mean China's government will create problems for American companies that rely on China for customers and supply chains like Apple, General Motors and Walmart. But as Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis, explains, in this new unpredictable environment of steep tariffs, U.S. companies may start looking elsewhere to make their products.
ALICIA GARCIA HERRERO: To ensure that - to control the U.S. production chain, probably China is no longer a safe place for the U.S.
SCHMITZ: What was originally offshoring to China may soon become reshoring to other developing countries for U.S. supply chains, says Herrero. While that process could take time, it could mean big problems for a Chinese economy that's already vulnerable from years of mounting debt and slower growth.
HERRERO: Certainly it will lead to lower potential growth down the road because this is only extra pushing of an economy that can't really go to the speed that the authorities want it to go.
SCHMITZ: As financial analyst Andrew Collier points out, China has accumulated more debt than almost any other country in the world. And they're running out of tools to deal with the problem. He says a trade war could make the situation even more dangerous by rising unemployment, one of the biggest threats to Communist Party rule. Rob Schmitz, NPR News, Shanghai.
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