No Longer a Trade Tiff: China Screams ‘People’s War’

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Gordon G. Chang

economy, Americas

Reuters

Xi Jinping Wants the Chinese people to believe that Americans—and not him—are responsible for the declining economy.

“People’s war.” That’s the Communist Party’s new term for the trade dispute with the United States.

The Global Times, the party’s nationalist tabloid, used that phrase on the May 13, but China’s leaders obviously approved of the rhetorical escalation. Both People’s Daily, the self-described “mouthpiece” of China’s ruling organization, and the official Xinhua News Agency carried the piece to wider audiences.

There seems to be a mismatch in perceptions. President Donald Trump, in comments to reporters on Tuesday, characterized the trade disagreement this way: “We’re having a little squabble with China.”

Trump was calming jittery markets. The party, on the other hand, was inflaming passions. The stoking of emotions—“people’s war” suggests America is an enemy of all Chinese—suggests a trade agreement between the planet’s two largest economies is not in the cards anytime soon.

For months, market participants outside China, buying into the persistent cheerleading of Treasury Secretary Steven Mnuchin, assumed the two giants would reach a trade pact this spring. Most observers ignored, among other things, internal Chinese factors pushing Beijing away from agreement with the United States.

Outside China’s tight political circles, there is no consensus as to what these factors are, but there are unmistakable signs of either disunity or dysfunction, in either case something wrong at the heart of China’s political system.

If there were nothing wrong, then China would not have at the last minute withdrawn commitments it made to lead negotiators Mnuchin and U.S. Trade Representative Robert Lighthizer.

As is now known, the Chinese team on the May 3 returned to the United States the draft 150-page trade agreement without including concessions that Vice Premier Liu He, the head of the Chinese team, had previously extended.

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