2018-04-07

Chinese Start Quoting Sun Tzu, Prepare for Asymmetric Warfare

China to President Trump: U.S. companies in China will be targeted, prepare to have your financial markets attacked and good-bye North Korea deal.

iFeng: 侠客岛:特朗普的精明与失策
In the same 50 billion U.S. dollars trade volume, the list announced by the U.S. involves 1300 Chinese products, and our counter-attack list involves 106 U.S. products; the average export value of U.S.-related exports is equivalent to 12 times the average export value of China’s export products. In other words, each US export product involved in the case was hit by more than 12 times the Chinese commodity. Since the trade war is a "war," like the war with live ammunition, it is "won't hurt its fingers and smash it". Obviously, we have mastered this principle better.

Second, the timing of the U.S. side’s announcement of the list and the announcement of the expansion of the scale was not sufficiently considered.

Perhaps Trump's team did not fully consider that this Sino-U.S. trade war is not just a battlefield for trade in goods like other trade wars, but covers service trade, financial markets, and may even affect many political affairs cooperation.

In the two aspects of trade and financial markets, the principle of the trade war should be to create as much damage as possible and less hurt themselves. Because of this, I had originally expected that the US would choose to announce the list of US$50 billion on the 7th or 8th. This would make the Chinese stock market that opened after the Ching Ming Festival bear the brunt of the first wave and hit the US stock market more than 10 hours later. In the city, the crackdown has been digested a large part of the impact on the US stock market is limited. However, the United States chose to announce a list of US$50 billion trade wars in the early morning of the 4th and the East of the United States on the 3rd. The impact on the Chinese stock market has ushered in the Ching Ming closed market for only one trading day. On the other hand, the US stock market will be affected by three consecutive transactions. Day is closed.

This time, Trump’s announcement of an expansion of the battle is not on the 8th, but on April 5th (Thursday) EDT. Although it will soon be counterattacked after China announces the list of revenge, it will win the “Chuanfen” award. The cheers, but the result is that the US stock market opened on Friday, the US East, to bear additional pressure, but weakened the destruction of the Chinese stock market after the Qingming market opened.

"Sun Tzu" has a saying: “No ruler should put troops into the field merely to gratify his own spleen; no general should fight a battle simply out of pique.” and Trump himself and his team have provided a perfect negative example of the teachings of Sun Tzu in this time of battle.

In contrast, our time for the announcement of the 50 billion U.S. dollar retaliation list was elected on the afternoon of April 4. After the announcement, the market was closed. After the Ching Ming period, the market was reopened and the side effects of the impact on the home financial market were minimized. It is self-evident that the two are relatively high in terms of time.

Faced with the pressure of the US trade warfare, as many of our spokespersons, including the Ministry of Foreign Affairs or the Ministry of Commerce, have said, we will follow suit. Precisely as "Sun Tzu" says: I am not attacked by the enemy, but make the enemy afraid to attack. We must prepare for the worst.

Although it is our long-term task to deal with the pressure of trade disputes, we must fight a punch to avoid hundreds of punches. Effectively responding to this "epic trade war" will bring many benefits to our future work in dealing with trade disputes. This will inhibit the moral hazard of trading partners, as if this unreasonable trade war recurrence probability is greatly reduced, even for a considerable period of time.
The article is by Mei Xinyu, a Research Fellow, Institute of International Trade and Economic Cooperation, Ministry of Commerce.

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