Knowing what we do of Donald Trump’s personality, it’s still sort of hard to believe that he isn’t going to fold at some point. And sure enough, here comes a 90-day reprieve to keep the oxygen flowing to the Chinese murkily-state-linked giant.
But knowing what we do of human nature, it’s hard to see how – after being mightily slapped down over trade talks and now Huawei – Beijing could laugh it all off and get back to normal with the US for some mutual lovey-dovey ‘win-win’ partnership, even if Trump did some sort of U-turn.
The traditional mainstream moderate consensus has always been that this sort of trade conflict is all about cutting off one’s nose to spite one’s face, and everyone loses. But that consensus died somewhere back there. The new logic is that while the US might suffer a bit, China will suffer a whole lot more.
China’s nationalists are ranting that this won’t work with such fury that we can justifiably suspect it will.
How, realistically, does China retaliate when all that’s really happening is that it is being forced to play on a level playing field that it lacks the ability to win on? Fantasize about borderline suicidal measures like dumping US Treasuries or letting the Yuan plummet? Stop buying US pork just as half our pigs die of disease? Broadcast non-stop anti-American Korean War movies on TV? Blather on about the Long March and visit a rare earths mine? Cancel the final episode of absurdly time-wasting and unfunny Monty Python and the Holy Grail remake Game of Thrones? Send SCMP columnist Alex Lo to give the Yankee imperialists a serious smacking?
And assuming China does find a way to retaliate – in its usual subtle, charming and classy manner by burning down every Starbucks or kidnapping someone – how does that make Trump or any American learn to love the CCP?
Hard to believe that we are really heading into ‘de-linking’ and a ‘new Cold War’. But even harder to see how we’re not. But my big question: When will someone tell the stock market?