With or without the trade war, many economists have predicted the US might see a recession by 2020. Because it is cyclical. The economic expansion has gone long enough. A recession is overdue. Full-fledged trade war not only accelerates that possibility, but it also makes the recession deeper and perhaps longer.
The way US politics works is, if you are a president and the economy is in recession during an election year, you are going to lose. You can see that happening going back decades.
Granted there can be seen bipartisan support for the trade war on Capitol Hill, the voter blames the US president when there is a recession.
Trump could lose his bid for re-election. A mishandled trade war works against him.
But what about Xi? What are the political fallouts for him?
The Chinese economy has not only not seen a recession in decades, but it also grew at double-digit rates for decades. Now it is "down" to something like 6.5%. If the trade war makes that go down to something like 5% Xi might still be okay. Up to 2% knockoff that might last a few years might not throw major political challenges for Xi.
But if things go haywire, and China ends up actually dipping below zero, an extremely unlikely scenario, then there might be mass unrests. But that would take a lot of irrationality in the trade talks to get there. I have a feeling the two parties might not go that far.
If China's growth rate dips below zero, that is pretty much a global recession or worse. That might also be a scenario of the US economy contracting.
There is word Modi intends to invite Trump and Xi to his swearing-in ceremony. At any other juncture, that might have been just a ceremony. But now that invite has enormous geopolitical implications. The two should take it and figure out a way to pull back on their respective stances, allowing room for face-saving on both parts.
Xi Jinping seeks global cooperation on technology after Huawei’s US ban Countries should cooperate in developing the Internet, big data and artificial intelligence, China President Xi Jinping said.....Shares of semiconductor and chip suppliers have plunged over the past month amid trade-war tensions. Raymond James analyst Chris Caso said in a note to clients this week that he expects “many, if not most,” chip companies may have to cut estimates.
China is indicating it’ll never give in to US demands to change its state-run economy “At the negotiating table, the U.S. government has made many arrogant requests, including restricting the development of state-owned enterprises.....Obviously, this is beyond the field and scope of trade negotiations, (and) touches upon China’s fundamental economic system.”
"High-Level" Meeting, Engagements Planned For PM Modi-Xi Jinping This Year: Envoy "Both sides (India and China) are very keen to engage...and so much can be done between the two countries"...... The Chinese President vowed to work with PM Modi to take the bilateral ties to a new height. He also expressed satisfaction at the strong momentum of development in India-China relations in recent years with the joint efforts of both the sides...... In the letter, President Xi noted the great importance he attached to the development of India-China relations.
China would benefit from a positive response to US trade complaints Thanks in large part to American investments and technology, China moved from its cheap smokestack manufacturing base of the 1980s to an engineering powerhouse, with cutting-edge industries ranging from infrastructure to transportation, telecommunications, computing, military hardware, space exploration and global retailing. ....... even in good years American spendthrifts save barely 6% of their after-tax income, while the penny-pinching Chinese squirrel away half of what they earn....... Trump apparently still hopes that he can cut the Gordian knot with Chinese President Xi Jinping during the G-20 meeting in Japan next month. That perhaps explains his puzzling one-liners bubbling with optimism regarding trade talks with China. ....... Washington, for its part, should step back from meddling in China’s legislative process and economic policies, while reserving the right to vigorously respond to cases of intellectual property violations, forced technology transfers, illegal industry subsidies and restricted market access to U.S. businesses operating in China....... markets should not exaggerate the importance of U.S.-China trade tensions for a fully employed American economy driven by low credit costs, real disposable household incomes growing at annual rates of 3% and strong corporate earnings.
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The effects of Modi thwarting a Dalai-Xi meet
India likely to invite Trump, Putin, Xi Jinping for Narendra Modi's swearing-in; reports say Pakistan unlikely to be invited
