China preparing for prolonged US trade war in 'strategy shift,' researchers say
President Trump is urging China to come to the negotiating table soon – or things could get “much tougher” for its economy – but some experts think Beijing could be ready to engage the U.S. in a trade war over the long haul.
Researchers from Deutsche Bank wrote a note over the weekend, explaining how they believe China appears to have shifted its strategy from a focus on “resolution to one of endurance.”
“We think China is neither aiming to quickly reach a trade deal, nor trying to hit back at the U.S. as hard as it can,” Deutsche Bank China Economist Yi Xiong wrote in a report. “Rather, China seems to have internalized the trade war as a given fact, and is trying to preserve China's economic resilience under rising tariffs.”
There are two primary reasons for the perceived shift in mindset: The first is that resolving the trade war is no longer the top issue in U.S.-China relations and the Chinese government may have decided the effects of the trade war are manageable.
Researchers said China’s main goal in responding to U.S. tariffs is not to damage the U.S. economy, but rather to disincentivize further escalation of the tariff battle.
The report also predicts “prolonged trade tensions” that “may escalate at times,” with a small likelihood of a comprehensive trade deal.
Over the weekend, a new round of tariffs went into effect on goods from both countries. The U.S. implemented tariffs worth 15 percent on a host of goods from China, a decision that was met with countermeasures.
In a series of tweets on Tuesday, Trump warned China against playing out the clock to negotiate with a new administration.
He also pushed back on suggestions the U.S. should team up with the European Union to pressure China into changing its trade practices, alleging those countries also treat the U.S. “very unfairly on trade.”
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