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24 August 2019

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Barbara Ann

Excellent post!

I find it really amazing how much has changed over the past 18 months. Importantly, the contrary viewpoint of China and specifically the CCP has entered our discourse. This view had been previously suppressed in our media and the CCP perspective was what was packaged under "free trade" and parroted by the Chamber of Commerce, Wall St mavens, many think-tanks and our establishment politicians. Our MSM also was on that bandwagon.

What is most interesting is the success Trump has had in injecting the counter-narrative into our discourse and how even folks like Chuck Schumer & Marco Rubio are beginning to sing from a similar song sheet.

IMO, when Trump called China an "enemy" recently it crossed the rubicon from just a trade dispute to something larger. As you point out the CCP may have calculated that it is best to wait him out. But, what happens if he wins re-election?

As it is playing out right now, Trump has increased tariffs on Chinese goods and they have likewise done the same on our products. I haven't looked at it recently but I believe we may be on tariff parity on many goods as Chinese tariffs were significantly higher relative to ours prior to the tariff war. In the case of China, it is not just tariffs, they have had significant non-tariff barriers and they have even outright banned some US companies from operating there for sometime. Considering our acquiescence for all these years they were IMO very surprised at Trump's action and Lighthizer's negotiating stance. This has been a change of dynamic that has caught them unprepared and they don't have the necessary consensus at the highest levels of the CCP on how to respond.

I believe the US has a much stronger hand in this dispute and that strength is being masked by the NeverTrump media that is painting a much more dire picture. His stance of a more balanced trading relationship is being obscured in the reaction to his tweet storms.

One thing to keep in mind is that the top echelons of the CCP have spirited and stashed their kleptocratic gains in the west. While Xi may seem invincible and in absolute control of the CCP today, if that "wealth" is seriously in jeopardy there could be an internal coup. We're talking hundreds of billions of dollars!

Another issue is the situation in HK. If & when the CCP decide to crack down violently which seems inevitable, we could see a significant escalation with a coordinated move by the US, UK & EU to sanction the top CCP officials, effectively freezing their assets in the west. This must be a significant bone of contention currently in the deliberations among the CCP politburo and among the various CCP factions.

The CCP have substantial strength too as they have financed many entities and personalities in the west. They represent voices who have much access especially to the NeverTrump megaphone. The only certainty I believe is that the lead up to our election over the next 15 months will see increasing volatility in financial markets & media hysteria.

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