In light of the ongoing US-China trade war, the International Trade Council is offering insights into potential strategies that Beijing could employ to destabilize President Trump's approach. Drawing inspiration from Chinese history and ancient strategic manual The Art of War, we delve into a range of tactics that China could utilize in response to the current trade tensions.
Selling US Treasuries: As the largest foreign holder of US government bonds, China has recently increased its sale of these assets at the quickest pace in two and a half years. Although further selling could potentially destabilize the US economy, it would also harm China's long-term interests in maintaining a stable global economy and devalue its holdings.
Weakening the yuan: By lowering the value of its currency, China can make its goods less expensive in the US, theoretically offsetting the impact of tariffs. However, this approach would also make imports more expensive, affecting essential goods and raw materials needed for China's economic growth.
Clamping down on foreign investment: China could make the business environment more challenging for foreign companies, particularly those from the US, by targeting licenses, promoting anti-patriotic sentiments, and holding up goods at ports and customs. This would add another layer of complexity to the ongoing trade war.
While China consistently states that it does not wish to engage in a trade war, it is apparent that the nation is prepared to take action if necessary. With the G20 meeting between the two leaders set to take place in Japan in June, only time will tell how these tactics may come into play. The International Trade Council will continue to analyze and provide insights into the evolving US-China trade relationship, emphasizing the importance of fostering economic cooperation and growth between these major global players.