Other recent data show that China is leaning more heavily on the state sector for fixed asset investment (which is also slowing dramatically and trade, consumption, and investment are all down). At the same time, domestic pressure is building for the government to ease monetary policy or ramp up government spending to stimulate growth, which could exacerbate China’s debt hangover. Beijing is trying to make up for these structural disadvantages with political resolve and has thus curtailed the scope of permissible public discourse accordingly.
Above all, the trade war is a strategic game. If the U.S. agrees to lift tariffs, then China does not have to face these difficult policy trade-offs; but the U.S. would have no reason to lift tariffs if it believes that China will capitulate. Thus, as this war of attrition drags on past 500 days, both economies are hurt but have the incentive to hold out until the other side gives in. This may be one reason that scholars publishing in less visible outlets behind academic journal paywalls have adopted a much more conciliatory tone. For example, Professor Liu Feng of the Institute of International Relations at Tsinghua University5 has recently called for scholars and policy makers in the U.S. and China to jointly explore how to effectively manage strategic competition and avoid long-term systematic confrontations. It is also worth noting that Song’s People’s Daily op-ed is framed against the view that "China should not fight back" and "make every effort to meet U.S. demands". While he denounces this view as "obviously wrong, naive, and very harmful", this framing acknowledges the debate exists and is worthy of rebuttal. The full diversity of Chinese academic assessments of the trade war’s impact are thus difficult to measure with state-sanctioned sources and not adequately represented by the three authors profiled in this article.
1Song Guoyoun, "To End the War, China Should Fight, Must Dare to Fight, And Can Fight Well", People’s Daily 人民日报, 29 August 2019, http://opinion.people.com.cn/GB/n1/2019/0829/ c1003-31323709.html
2"Zhong Maochu, "China’s Economy Is Fully Capable of Coping with Escalating Sino-US Economic and Trade Frictions", Specials 特别策划, 14 June 2019.
5Liu Feng, "Limits and Management of Sino-US Strategic Competition", Contemporary International Relations 现代 国际关系, 2019, http://mall.cnki.net/magazine/Article/ XDGG201910003.htm