China promises to fight until the end '' against Donald Trump's prices

President Xi Jinpings is decision to quickly retaliate against Donald Trumps Balaying Prices sent a clear message to the world: if the United States wants a trade war, China is ready to fight.

After weeks of response with only targeted measures and calling for dialogue, China reported a more difficult approach on Friday by responding to the reciprocal prices of Trumps with general tasks of its own controls and more export. The Official Journal of the Communist Parties followed this with an editorial on Monday declaring that Beijing no longer clings to illusions to conclude an agreement, even if it leaves an open door to negotiations.

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Chinas' response has shook the world markets, fueling fresh volatility while investors are preparing for a prolonged and disruptive trade war. Trump deepened these concerns by taking a provocative tone on Sunday, saying that he will not conclude the agreements to reduce the samples unless they eliminate the American trade deficit with this country.

We believe that before being able to sit down to negotiate an agreement, we have to fight, because the other side wants to fight first, Wu Xinbo, director of the Fudan University Center for American Studies in Shanghai, said about Chinas' position. On the possibility of a Trump-Xe call, Wu said: you just slap my face and I will not call you and ask you for your forgiveness.

Actions have dropped on concerns about the impact of trade wars on the world economy. Asia has crowned the worst day since 2008. A Chinese action gauge listed in Hong Kong fell on a lower market, while the cities reference index has plunged the most since 1997. European Stoxx 600 has plummeted more than 6% at a given time, while the S&P 500 eventually reported more Turmousse for the American markets.

Pressure and pride

An escalation of tensions can decrease the prospect of a management call in the near future. Trump has not spoken with Xi since his return to the White House, the longest that a American president left without talking about his Chinese counterpart after the inadequate in 20 years.

Trump and Xi are locked in a paradox of pressure and pride, said Craig Singleton, a principal researcher at the non -partisan foundation for the defense of democracies. But here is the dilemma: if XI refuses to engage, the pressure degenerates; If he engages too early, he may appear weak.

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While China confronts reality that the increase in American samples at a Bloomberg Economics rate says that bilateral trade will be mainly inevitable, the main leaders increase the efforts to strengthen the national economy. Political decision-makers huddled in Beijing during the weekend to discuss the plans to speed up the stimulus to stimulate consumption, reported Bloomberg News, while Xi relies on the large base of Chinese consumer to help absorb the production of the country.

What Bloomberg Economics says …

Given the Chinese economy of American prices, we expected the decision -makers to accelerate the stimulus and the news they discussed measures to stabilize the economy and the markets seem to confirm that the work.

Chang Shu, David Qu and Eric Zhu

Read the full note here.

The Chinese chief walks a stiff rope. He must project force at home, while supporting an economy with a deflation. A major challenge is to restore consumer confidence, which has been deeply shaken by a housing crisis of several years which has destroyed an important part of their wealth.

Several major world banks, including UBS Group AG, Goldman Sachs Group Inc. and Morgan Stanley sounded the alarm during the weekend on the potential economic benefits of USS's most steep price hikes in a century. They warned that this could express even more pressure on the already modest growth forecasts of 2025, which are already as low as 4%.

Croissant arsenal

Beijing has several tools that he could reach if tensions with Washington worsen. If past actions were a guide, it could let the yuan weaken to compensate for the impact of prices, tighten export controls on critical minerals or increase pressure on American companies operating in China.

At the same time, China can expand its diplomatic awareness by building stronger economic links elsewhere. Last month, commercial officials from China, Japan and South Korea summoned jointly for open and fair trade. During a recent visit to Brussels, Chinese Deputy Minister, Liao Min, expressed his desire to work with the European Union to defend the multilateral trading system. The Chinese Embassy in Ottawa has also made similar openings on partnership with Canada.

XIS expected the visit to Southeast Asia later this month to take on additional importance. Beijing will probably examine what countries like Cambodia, Malaysia and Vietnam could offer Washington in the hope of relieving prices, and if these movements could reduce Chinese interests.

What can be more difficult to manage for China would be the protectionist measures in Knock-On than other savings will take to protect their industries from an expected flood of cheaper Chinese goods, as demand in the United States and other key markets are tightening, said Lee Sue-Ann, senior scholarship in Ishak Ishak Institute.

However, despite the increased pressure, there is no clear sign that China is trying to decline fully from the United States. Instead, he seems to assert his position and prepare for a prolonged confrontation, while keeping future open options.

China wants to transmit to the United States that it is not intimidated and is willing to hold the ground, said Henry Gao, professor of law at Singapore Management University, who does research on Chinese trade policies. Rather than aiming to inflict significant damage, the objective seems to be to put pressure and encourage dialogue.

Dependence reduction

Chinas' confidence this time comes from the belief that it is better prepared than during the First Trumps Trade War, having learned from the past eight years. Beijing has expanded its network of trade partners, reducing its dependence on the United States for imports and exports.

The United States took less than 15% of Chinese exports last year, against 19% in 2017 before the trade war, although trade in third countries probably represented part of the deficit. Likewise, imports from the already relatively low United States has become less critical for China.

Agricultural products are an excellent example, China seeking to reduce its dependence on American soybeans. American exporters who once dominated the Chinese market saw their share drop to only 20% last year while China increased purchases in Brazil instead.

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All this can buy more time in China until the two parties agree to meet at the negotiation table.

Wang Yiwei, professor of international relations at Renmin University and a former Chinese diplomat, suggested that China expects Trump's efforts will soon be lacking.

The soldiers would be very willing to fight when the first battle drum rings, but it starts to fade in the second round, he told Bloomberg, citing an old Chinese saying.