No one is listening, so bluff yourself.

Writing about the trade war between the US and China, Yu Yongding wrote, "Unless the leaders of the two countries can strike a deal at next month's G20 meeting in Buenos Aires, the situation is likely to worsen. That is better news for China than it is for the US." If that is the case Yongding should be thanking Trump instead of abusing him as "the fool -- a bungling, capricious leader whose attacks on China only made that economy stronger, at least at America's expense." Someone is doing good for China and you are abusing him. China helps the US because "thanks to low-cost imports from China, US consumers pay less for a wide range of goods". The implication is that tariffs on Chinese imports will cause inflation in the US. But, the fall in the exchange rate of the yuan against the dollar means that the effect of tariffs is canceled out to a large extent. The yuan has fallen from 6.3 against the dollar to around 6.93 and if it falls to the psychological level of 7 there could be more selling of the currency. China has imposed retaliatory tariffs of 25% on import of soybeans and corn from the US which means that it will have to pay higher prices as it looks for other sources and the yuan weakens. That may cause inflation in China. To keep the yuan from appreciating China was buying US treasuries, it's holding reserves of more than $3 trillion. "Without inflows of Chinese capital,the US Treasury would face higher interest rates, raising cost of financing government debt and the cost of homeowners' mortgages." The subprime crisis has been blamed on unnecessarily low interest rates in the US, which has come to be known as the 'Greenspan put'. Household debt in the US is in excess of $13 trillion, while median savings account balance is only $5,200 so higher interest rate may help by increasing savings and preventing asset price bubbles. At first China thought that Trump was bluffing but it got a shock when Vice President Mike Pence declared, "We will not be intimidated; we will not stand down, " wrote William Pesek. Instead of focusing on "Made in China 2025", "Xi's undivided attention is on making this year's growth numbers." Chinese President Xi Jinping hit out at Trump and made promises to import goods worth $30 trillion over the next 15 years at the recent trade fair at Shanghai but no one believes him any more. Heads of of state of 18 small countries attended while CEOs of larger companies avoided the fair. So, what can China do? The yuan is already weak so devaluing is not an option. It may target US firms with unfair restrictions but that will surely invite further reprisals from the US. Which maybe why Jack Ma is so bitter. Yongding and Jinping may desire a ring a ling but we will enjoy a right ding-dong. Happy Diwali.