Both Xi Jinping and Donald Trump have waged their trade war from the comforts of their respective luxurious residences: the former imperial compound of Zhongnanhai in Beijing and the neoclassical White House in Washington.
The soaring price rises and fears about sudden job losses that have followed their April tariff tussle are far removed from the lives of the world’s two most powerful men.
Mercifully for Chinese workers, Beijing’s announcement of a softening of its previously intransigent approach to trade negotiations with Washington suggests Xi is at least aware that many of them are hurting. Fittingly, the announcement was made during China’s May Day holiday, which celebrates the country’s workers.
Beijing’s own statistics on Wednesday revealed the country’s factory output has slumped after Trump, following counterpunches from Xi, set tariffs on Chinese goods at 145 per cent. Things could get a lot worse in the coming months.
America is feeling the pain too, as blue-chip companies have made abundantly clear in earnings calls this week. Walmart has warned the US President that shelves in its stores will be empty unless his tariff wall is breached in the coming weeks.
Much has been written about China’s structural advantage in this contest because of the powers of its Leninist state to shape public opinion. Xi also doesn’t have elections to worry about, or noisy opposition parties to question the wisdom of his decision to counterpunch so spectacularly after “Liberation Day”.
However, China’s leader doesn’t operate entirely removed from the world around him. Xi would be a brave leader to allow the numbers of unemployed in China to significantly rise, even as America’s President signals, again and again, that he wants to find a way to walk back from some of their mutually assured economic destruction.
Earlier this week, China’s Foreign Ministry released a propaganda video, pledging to “Never back down!”, which even commentators sympathetic to the Chinese government described as “cringe-worthy”.
Friday’s announcement from China’s Commerce Ministry is to be welcomed after that effort, but this tactical adjustment should not be exaggerated. Let’s be clear: Beijing has announced that it is considering, maybe, just possibly, talking to Washington. No other country is behaving like this as they deal with the same mercurial Trump administration.
The reason for Beijing’s adjustment seems obvious enough – but how long it would take for Xi to strike a workable deal with Trump, or indeed whether that is even possible, remains far from clear.
All the while, the economic pain in the real world will continue.
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