Any kind of a trade war, as an example what’s going on between China and the US just now, is easily comparable to a game of chicken. And, as Captain Bart Mancuso suggested in the Tom Clancy novel Hunt for Red October, the hard part about playing that game is knowing when to flinch.
I’ll say this right up front, I’m inclined to believe that China is not going to win this fight. The already fragile Chinese economy has fallen on serious hard times even by those lights within the last few weeks.
Relative to what China was shipping out as little as a few months ago, absolutely nothing is flowing following Donald Trump’s terrace taking effect and the bite is being felt.
I’m seeing reports from all over China but Southern China in particular that containers are piling up at a rate never before seen in places like Shanghai, and Guangdong.
This is causing problems for China on many fronts, the two largest of which are the domestic economy which has been on the verge of collapse for over a year now. The other is China’s appetite for military buildup. No product being shipped, means huge financial losses for the CCP, which in turn means that money for military projects isn’t happening.
Chinese trade policy for the last few decades has basically prohibited us goods from reaching that market. Meanwhile, China’s been raking in a huge amount of cash from selling their goods here. That cash flow is now non-existent and they’re going to have to react, if they want to save their internal economy and get their military aspirations back on target.
My read is that they’re going to have to do it soon before they lose everything. Thing is, they know this. So it’s down to being able to make it happen in a way that allows them to save face.
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