(Bloomberg) — President Donald Trump misjudged Beijing by calculating that it would cave into economic pressure, leaving the US unprepared to handle the current tariff standoff, according to an adviser to China’s Foreign Ministry. Most Read from Bloomberg “The mainstream narrative within the Trump team is that because the Chinese economy is bad, if the US plays the tariff card, then China will have no choice but to surrender,” said Wu Xinbo, director at Fudan University’s Center for American Studies in Shanghai, who last year led a group of experts in the ministry to meet politicians and business executives in the US. “But surprisingly to them China didn’t collapse and surrender,” Wu said during a panel discussion in Shanghai on Friday.
“The US side misjudged the situation and also is not well-prepared for the confrontation with China.” The fate of the global economy and financial markets hinges in large part on whether the US and China can find a way to avoid a protracted trade war. Trump has hit China with tariffs of 145% on most goods since taking office, prompting Beijing to retaliate and threatening to wipe out most trade between the world’s biggest economies. The trade war comes as Chinese policymakers grapple with persistent deflation, a yearslong property crash and weak consumer spending.
Exports accounted for nearly 40% of growth in the first quarter, underscoring the importance of global shipments to driving the Chinese economy. Trump has repeatedly tried to get President Xi Jinping on the phone since he began piling tariffs on China, and claimed this week that talks between the two sides were taking place, while refusing to specify at what level. China has denied any trade negotiations are underway, and Foreign Ministry spokesman Guo Jiakun said Friday that the US “should not mislead the public.” Before talks begin, officials in Beijing want to see Trump show more respect by reining in disparaging remarks by members of his cabinet, Bloomberg previously reported.
China also wants the US to name a point person for talks and show a willingness to address China’s concerns around American sanctions and Taiwan, the self-ruled island Beijing considers its territory. Highlighting the widening rift between the two sides, China’s central bank Governor Pan Gongsheng and Finance Minister Lan Fo’an are both in Washington this week for annual economic meetings, but neither have announced plans for talks with Trump officials. It’s customary for Chinese officials to huddle with the US treasury secretary or lower-level staff on the sidelines of the World Bank and International Monetary Fund meetings.
Talks could still take place in the coming days.
