The Case Is Only Growing for an Economic Forever War

(Bloomberg) -- .President Donald Trump’s trade war with China has become a bigger, broader economic forever war. It’s hard to look ahead and see any outcome that undermines that emerging reality. A “phase one” deal may be in what U.S. officials say is its messy end stages. But that deal, if it comes, will be partial and more ceasefire than game changer. It also doesn’t mean a larger peace is nigh. Moreover, there are three live truths that are becoming inescapable:. While both the U.S. and China have worked hard to maintain a wall between their trade talks and other political developments, that’s becoming harder with each passing week. The events in Hong Kong over the weekend, with police laying siege to a university, are escalating as are the calls in Washington for U.S. action. The weekend publication by the New York Times of documents detailing the official Chinese campaign against Muslim minorities in Xinjiang will only add to that sentiment. The art of the trade deal is the art of knowing how to exploit the domestic politics of your opponent. It’s hard for a dispassionate observer to look at the impeachment inquiry, or the weekend gubernatorial election win for Democrats in Louisiana, and see strength for Trump. Beijing has long been best at misreading American politics and Trump has been a unique political phenomenon. But the reasons are only growing for China to hold out for elections that are now less than a year away. The search for survival strategies is afoot. At this week’s Bloomberg New Economy Forum in Beijing the dominant discussion will be how to navigate a new era of technological competition between the U.S. and China. And the ideas are already flowing fully. In a Bloomberg Opinion column published last week, Jude Blanchette and Scott Kennedy called for a new strategy of “managed interdependence.” In another over the weekend Gabriel Wildau called for the U.S. to return to a tradition of state-led technology investment (think Sputnik moment) and emulate rather than attack China’s industrial policy..None of these things will go away if the U.S. and China, whose top negotiators spoke again late Friday, close an interim deal. Much as that may pacify — or even cheer — financial markets..Charting the Trade War.The U.S.-China trade war reignited the debate over which developing countries in Asia could take over the mantle of the world’s workshop. The front-runners? India and Indonesia..Today’s Must Reads. Falling barometer | Global trade in goods will likely remain below trend because of heightened tensions and rising tariffs in key sectors, according to a WTO report. Limited damage | Japan’s trade curbs on South Korea have so far been a case of “the bark was worse than the bite,” with only limited fallout for South Korea’s economy, according to Citigroup. Eyeing China | Ford is considering making its new electric Mustang Mach-E in China, depending on how the trade war plays out, the automaker’s CEO said in an interview. Core constituency | Trump plans to tour an Apple plant in Texas this week to highlight how the company is assembling computers there after getting some Chinese parts excluded from tariffs. Adriatic dreams | Chinese money for a new high-speed rail line serving Italy’s Trieste port is another example of President Xi Jinping’s efforts to revive ancient trading routes under his Belt and Road Initiative..Economic Analysis. Outlook 2020 | Bloomberg Economics releases forecasts for the world economy in the year ahead. Three scenarios | Truce, peace, or war? Here are several scenarios for the global trade disputes..Coming Up. Nov. 20: Japan trade balance Nov. 21: South Korea exports and imports.To contact the editor responsible for this story: Brendan Murray at brmurray@bloomberg.net, Zoe Schneeweiss.©2019 Bloomberg L.P.

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The Case Is Only Growing for an Economic Forever War

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