China’s state news agency Xinhua has just made it clear once again how Beijing sees the situation. China doesn’t bluff. Being prepared to accept pain but China will hit back hard, says Xinhua:
„As the trade war between the United States and China escalates, the former, who started the fight, will bear the heavy brunt of its unilateralism and protectionism as China is well armed to deliver counterpunches.Tension between the world’s two largest economies reached a new height after the United States levied additional duties on Chinese goods and even used „national security“ concerns to bully Huawei, a major Chinese telecommunications company.“
There are many ways to strike back:
„Make no mistake, China is not bluffing. There are many possible options given the inter-dependency of the two economies. A trade war benefits nobody, but China has a resilient economy and abundant policy tools to weather further trade-war hits, while the U.S. long economic expansion has peaked and will soon start to feel the pinch.“
And then the threat against Wall Street:
„U.S. stocks have fluctuated violently in the past two weeks over renewed fears of a worsening trade war. Possible financial spillovers could turn the almost decade-long bullish stock market into a bearish one, jeopardizing the recovering U.S. economy.
U.S. multinationals, which have reaped a lot via access to the vast Chinese market and global supply chain with reduced costs and enhanced competitiveness, would also be hit hard if their share in the market shrinks as the U.S. moves disrupt market order.“