Beijing against the US

Chinese economy will grow by six to six and a half percent, despite the military situation on world markets. The government will simply add additional funds to the economy: as much in interest, in – more than 150 billion , with a total budget of about three trillion . As a result, the budget deficit will increase slightly (up to 2.8% of GDP – this is not at all scary).
But that’s not all. Beijing continues to use the deadly American weapon against the US – a tax cut for businesses. The value added tax will be reduced from 16 to 13%, while in transport and construction it will be reduced to nine percent altogether. The decline is not the first year, just now the “breathless” world had to look at the overall balance of all these measures and decide: yes, the numbers converge, China will be able to.

Why taxes are a weapon, including in the economic fight with the USA: because the one who has enough resources for the war wins in it. It is clear that any restrictions on imports from the enemy state are always beaten and on the one who introduces these restrictions. Therefore, the crux of the matter is how to sit out the peak of “military actions” and not to ruin one’s own economy, hoping that the opponent will not endure first.
And here the picture is very mixed, especially for America attacking China. The other day in the United States summed up the results of 2018, and it turned out that it has long been … well, more precisely, since 2005 the country has not been so good. America has increased its GDP by 2.9-3.1% (according to a different calculation system), overtaking Germany and Italy and the UK. Inside the United States, as always, there is a dispute – is everything so good and will it soon be very bad? But one thing is difficult to challenge: the point is taxes. In a Donald Trump administration’s tax cut in 2017. And in the abolition of its step by step, hundreds and thousands of all restrictions for .
Tax cuts and everything else sharply revived small and medium businesses, reduced unemployment, increased wages, led to an increase in consumer activity. Of course, all this did not solve the deep-seated problems like chronic and bad debt. And yes, maybe further in the country it will be worse (although they predict, on the contrary, an even greater acceleration of growth), but so far the safety margin, including in trade wars, has increased in the United States. And China just repeats (and not for the first year) the same tax technique and also builds up its muscles.
Here the question arises: what will happen next with the economic confrontation started by Trump with the main competitor of the United States? Especially considering the fact that at the end of the month there will be a Trump summit with Chinese leader Xi Jinping in Florida, when it becomes clear whether the parties will conclude some big deal that will close all the accumulated issues. But they may come to nothing – Trump refused to sign documents at the summit with the leader of North Korea.
China (and much has already been said at the said session of the country’s parliament) states that it is ready to negotiate, but it will not destroy the chances for further growth and development. America … here, as always in the USA, everything is very difficult. There are two factions of advisers and cabinet members. One says: sign sooner before it gets worse. The second came up with a deal that China is guaranteed not to accept.
Why America should become worse: there is a report on this subject prepared by experts from Princeton and Columbia universities with other colleagues. They claim that the main weapon of the trade war — the rise in prices of Chinese imports at the expense of tariffs and duties — did not really affect China, but it cost the US companies and consumers 4.4 billion dollars a month.
How it works: tariffs make imported (Chinese) goods more expensive, but the American manufacturer in this case raises prices, since those have risen from a competitor. That is, the entire burden of trade war is entrusted to the American consumer. And as long as he enjoys the fruits of the Trump tax cut, everything is tolerated. But patience is not infinite.
What kind of deal is preparing as a result of the summit? On this subject there are many leaks and assumptions, despite the fact that all assumptions may be true at the same time. The soft option of the deal seems to be related to Beijing’s proposal to cancel its own, reciprocal tariffs against American products and to purchase huge quantities of soybeans, oil with gas and other things, thus equalizing the trade balance. The Chinese economy will endure. But the main purpose of the US trade war – to block the technological advantages of China – with her worse.
Here, a group of “hawks” next to Trump came up with a deal that would prescribe the right of the United States to return the already canceled tariffs at any time, if the Americans consider that China plays up too much with its manufacturers, especially in terms of technology. But in the text of the document should be indicated a complete lack of the same right in China. In general, the essence of the idea is clear.
And it remains only for both sides to carefully weigh up before the next fight the very question – who has more resources to withstand all the difficulties associated with the continuation of the struggle.


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