China Once Looked Tough on Trade. Now Its Options Are Dwindling
This actually looks like the start of the disentanglement between the US economy and the Chinese economy. What will likely happens next (my best guess) is<p>1.) 40-60 percent of a company’s supply chain moves out of China<p>2.) China restricting the movement of capital&#x2F;equipments out of China (similar to what happened with Korean companies last year)<p>3.) China growing homebrew competitors to the foreign companies leaving, part of the ‘made in 2025 in China’ strategy, via state enterprises or state spendings in startups. China will also make US companies’ operation in China very hard, either with license restrictions, or increased local ownership.<p>4.) China will disincentivize Chinese consumers from purchasing US (or foreign) products, via propaganda, taxes, or control (similar to what happened with Japanese and Korean products last few years). This would be hard, as Chinese consumers prefer higher quality, higher brand value, and higher perceived value foreign products.<p>5.) China will have to target US farmers with tariffs, as there isn’t much US imports to tax otherwise. Plus, there is also face saving.<p>6.) US will increase the tariff coverage to all Chinese imports, either triggered by tariffs on US farmers, or threats to US companies.<p>7.) China local governments will try to seize US owned corporate assets, or prevent factories from shutting down by its owners. This will escalate the urgency for US companies to move out of China.<p>8.) 70-100% of company’s supply line will be out of China<p>9.) Eventually, most direct trades between both countries shrink down to less than $50B. Down to a significant level where it starts to effect GDP for both countries (China way more than US)<p>10.) China will have no choice but to embrace its lost decade, ala Japan. It will tighten controls on its citizens. It will try to contain high inflation and high unemployment rate. It will try to unwind its debt for the next 10-20 years.  Its gdp growth will go towards 0 or negative.  Its GDP will shrink 20-30%.<p>(posted this in another thread but didn&#x27;t get any discussion)