This column is being written in haste this week as we concentrate on fortifying our watchtower on the China coast ahead of the impending trade war. Actually, the tariffs and other sanctions and steps being prepared in Washington are unlikely to have much of an impact initially. But as a harbinger of the future and an indicator of shifts in the wind, they are very important.
It seems clear that the consensus is now pretty solid, at least in Washington and possibly in other capitals, that China’s approach to trade, including such issues as IP, need to now be addressed in a more robust way. How far the US administration will go in terms of concrete steps to reflect the bluster from the White House is not yet clear.
Also not clear is how China will react beyond the obvious statements of support for globalization, etc. that are already rolling out. There are a number of options here for Those in Command, including tit-for-tat measures, but also market-opening steps to undercut the new push. They will probably employ a combination of the two approaches while playing the divide-and-rule game at which they are so adept.
There are many American companies in China who are focused more on the shorter-term pain than the longer-term implications and Wall Street is listening to them. At the heart of the problem is the word reciprocity, and the fundamental systemic disconnect that is exposed by this confrontation is no more clearly exposed than in terms of (the lack of) reciprocity on land and real estate. Chinese companies and individuals can buy freehold in the US. No one can buy freehold in China. Back to sandbag stuffing.