Monday, August 26, 2019

Kautilya was right for India in 4th century BC.

"US President Donald Trump said China has asked to restart trade talks, hours after Beijing's top negotiator publicly called for calm in response to a weekend of tit-for-tat tariff increases that sent global stocks plunging." "We are willing to solve the problem through consultation and cooperation with a calm attitude," said Chinese Vice Premier Liu He. "We firmly oppose the escalation of the trade war." Soothing words cannot undo "the problem" so easily when Beijing started the present round of tariffs by "letting the yuan tumble to the weakest level in more than a decade and asking state-owned companies to suspend imports of US agricultural products". A furious Trump "ordered" US companies to get out of China. Trump also increased tariffs on Chinese products. "The White House will raise existing duties on $250 billion in Chinese products to 30% from 25% from October 1, the president tweeted. The tariffs on another $300 billion in Chinese goods, which start to take effect on Sept 1, will now be 15% instead of 10%, he added." So who is under greater pressure? Trump, who is to face re-election on 3 November 2020, or Chinese President Xi Jinping who has built up an image of a strongman. "His name has been added to China's Constitution. No living figure has gotten this treatment since the most famous Chinese Communist Party leader of all: Mao Zedong," wrote Prof J Wasserstrom. "The harder line underlines the growing feeling in Beijing that Trump can't be trusted to cut a deal, and that China would be better off waiting to see if a Democratic presidential candidate -- many of whom have criticized the use of tariffs -- takes office." But, can China afford to wait for 20 January 2021 when the new president, if Trump loses, will be sworn in? "In the first half of the year, Mexico was the top trading partner of the United States, followed by Canada, the latest official data reveals, according to the Wall Street Journal." China's economy showed further signs of strain in July with output at its factories falling to its lowest level in 17 years, while investment and retail sales slowed, official data showed Wednesday." "I think you can say the US is winning because the Chinese are now doing things which smell desperate," said China expert Gordon Chang. By allowing the yuan to weaken they are bearing some of the tariffs on their products. Meanwhile, China's friend Pakistan, with a population of 212 million, is having to adjust the price of roadside rotis and naans, after receiving a loan of $6 billion from the IMF. Argentina, with a population of 44 million, received a loan of $56 billion from the IMF, while Ukraine, with a population of 42.5 million, was promised $17.5 billion. If China's economy tanks, Pakistan will not be able to afford naans, maybe not even rotis. "The enemy of my enemy is my friend," wrote Kautilya in Arthashastra in the 4th century BC. Perfect for India.

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