The Chinese seem baffled at the moment. For the last 25 years, whenever China and the USA came to point where there could be some confrontation, the Chinese just pushed forward and the USA gave way. As president, Bill Clinton, George W. Bush and Barack Obama never (and I mean NEVER) confronted the Chinese no matter what they did. The theory of these presidents was that if we could integrate China into the world community, the Chinese would moderate and act like good partners. China pretended to do just that, but in the meantime, the Chinese stole all sorts of US intellectual property, forced US companies doing business in China to give up their secrets, ran one-sided trade scams and spied constantly on American government and business. The Americans just smiled and moved out of the way of the Chinese.
Since President Trump has been in office, the Chinese are not sure what to make of current events. Trump bent over backwards to welcome Chinese president Xi to the USA and Trump seemed ready to agree to just about anything the Chinese wanted to get their cooperation on North Korea. The Chinese thought it would be business as usual. And then it happened. The USA stopped giving way to China. America started pushing back. China was taking unfair advantage on trade; Trump responded with tariffs. China was pushing invalid claims in the South China Sea. Trump responded with military force in that portion of the ocean. China threatened to stop helping with North Korea. Trump ignored Xi and went ahead with negotiations with the NKs anyway. The Chinese threatened retaliation and then took action after the first US tariffs. Trump laughed off the response and doubled down. America is now putting tariffs on Chinese products to such a great extent that it threatens China's ability to keep its economy growing. The Chinese have run out of tariffs that they could impose on US goods.
This has created real problems for China. The Chinese economy has slowed. The Chinese currency has been collapsing. Meanwhile, there has been little, if any, effect on the US economy.
The Chinese just announced changes to the bank reserve requirements in China. Putting that in English, the Chinese have seen how the moves by the USA are pressuring Chinese banks and the economy. The Chinese government is hoping to use its banks to inject more liquidity into the economy. It is a risky move. If it works, it will just be a temporary fix. On the other hand, if this move does not work, it could lead to a major recession in China.
Hopefully, the Chinese will recognize what is happening and decide to change their behavior so as to escape American sanctions. That would be the sensible course for them to follow. Sadly, what is sensible and what actually happens are not always the same thing.
Since President Trump has been in office, the Chinese are not sure what to make of current events. Trump bent over backwards to welcome Chinese president Xi to the USA and Trump seemed ready to agree to just about anything the Chinese wanted to get their cooperation on North Korea. The Chinese thought it would be business as usual. And then it happened. The USA stopped giving way to China. America started pushing back. China was taking unfair advantage on trade; Trump responded with tariffs. China was pushing invalid claims in the South China Sea. Trump responded with military force in that portion of the ocean. China threatened to stop helping with North Korea. Trump ignored Xi and went ahead with negotiations with the NKs anyway. The Chinese threatened retaliation and then took action after the first US tariffs. Trump laughed off the response and doubled down. America is now putting tariffs on Chinese products to such a great extent that it threatens China's ability to keep its economy growing. The Chinese have run out of tariffs that they could impose on US goods.
This has created real problems for China. The Chinese economy has slowed. The Chinese currency has been collapsing. Meanwhile, there has been little, if any, effect on the US economy.
The Chinese just announced changes to the bank reserve requirements in China. Putting that in English, the Chinese have seen how the moves by the USA are pressuring Chinese banks and the economy. The Chinese government is hoping to use its banks to inject more liquidity into the economy. It is a risky move. If it works, it will just be a temporary fix. On the other hand, if this move does not work, it could lead to a major recession in China.
Hopefully, the Chinese will recognize what is happening and decide to change their behavior so as to escape American sanctions. That would be the sensible course for them to follow. Sadly, what is sensible and what actually happens are not always the same thing.
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