The trade war will not be a game changer in China – Victor Shih

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Victor Shih

If some US politicians hope the trade war between China and the US might undermine Xi Jinping’s domestic power base, they are on the wrong track, says political analyst Victor Shih at US-China Economic and Security Review Commission hearings at the US Congress, according to the South China Morning Post. 

The South China Morning Post:

Policy analysts gave written and spoken testimony to the US-China Economic and Security Review Commission annual review just hours before top trade negotiators confirmed a face-to-face meeting in early-October in a step resolve their increasingly bitter trade conflict.

Among them was Victor Shih, associate professor of global policy and strategy at University of California San Diego, who said that the trade war may succeed in creating divisions among policymakers in Beijing as to how to deal with China’s economic slowdown.

As economic losses accumulate under the trade war, Shih expects divergent camps in the ruling Chinese Communist Party to emerge and pressure Xi to ramp up economic stimulus. Beijing has already announced a series of monetary easing steps and increased fiscal spending in a step to push for new growth under the tense trading environment.

“It would take a truly massive economic shock to threaten [Xi’s] power,” Shih said, adding that high domestic debt and trade frictions with the US are leading to increased state intervention in the Chinese economy.

More at the South China Morning Post.

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