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October, 2018 8:34 AM



Trade wars lead to internal cracks in Chinese government

Trade wars lead to internal cracks in Chinese government

The ongoing series of trade disputes between the US and China, the world's biggest economic superpowers, is coming to a head as reports of serious rifts in China's governing party have been reported.

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11.08.2018 12:49 AM

The ongoing series of trade disputes between the US and China, the world’s biggest economic superpowers, is coming to a head as reports of serious rifts in China’s governing party have been reported.

The Communist Party of China (CPC) has faced discontent from party veterans who are worried that the current trade wars between China and the US could begin to have a negative effect on the economy.

Many senior sources from within the party have been briefing news agencies such as Reuters and Japan’s daily publication Sankei Shimbun.

The strong nationalist rhetoric emanating from Chinese President Xi Jinping’s policy decisions seem to have angered some within the CPC, who are arguing that this type of internal policy is only riling up the US, which is retaliating in turn.

With the last decade becoming one of consolidation within the government with a clear outward display of unity at all times, this is a setback for a nation that is trying to appear unbowed by US President Donald Trump’s counter-measures in this developing trade war.

Sources have reported that the move to position China as a nation that cannot bend with trade measures and still retain its national pride is not having the desired effect on winning these trade standoffs and is only provoking the US into further tariff implementations.

The concern from those inside the government is that no matter the outward display of intent and ability to weather all the storms that come China’s way, its economic growth is likely to find itself stifled in the midst of a continual set of decisions affecting the cost of importing and exporting goods as effectively as before.

One senior advisor warned that the situation is “becoming grim” before noting that the current stance between both countries has turned what started out as a “trade conflict” into a war that “has made people rethink things” and adding that it may not be wise for China to carry on down this route in either the short or long term.

The source also suggested that the “exaggeration of China’s strength by some Chinese institutions and scholars” could very easily backfire if its economy was suddenly unable to withstand a change in key supply chains as a result of strong tariff measures coming into force.

Additional sources confirmed to Reuters that senior government officials may well close ranks and act against those responsible for the external communications output from China, with Chief Strategist Wang Huning rumored to be in the firing line. One source said that he is “hyping up China too much” and accused him of “mishandling” the directive.

Several veterans of the CPC sent a letter to their leadership last month, revealed Sankei Shimbun. The wording demanded an immediate review of China’s current economic and foreign policy intentions amid signs of weakening support for Xi’s leadership.

Meetings have already been underway in the Chinese government as top officials from within the CPC assess how best to counteract the damage caused by the current trade disputes with the US. They are discussing how they can stabilize the economy in the coming months and years in the face of a changing import and export landscape.

More tariff measures are taking place on both sides as a fresh new wave of measures comes into force later this month. The US and China are each levying an additional 25% tariff on $16bn of goods.

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