"The Outlook Has Become Grim": Trump Trade War Causing "Rare Cracks" Within China's Communist Party

Over the weekend, Trump claimed on Twitter that the US is winning the trade war with China for one simple reason: whereas US stocks are back to all time highs, the Chinese market has tumbled and remains mired in a bear market. Now, another - less naive - indication has emerged suggesting that the US is indeed getting the upper hand in the ongoing trade feud: according to Reuters, the trade war with the United States is "causing rifts" within China’s Communist Party, with some critics saying that China's overly nationalistic stance "may have hardened the U.S. position."

While China's President Xi still retains his undisputed grip on power, some have noted an unusual surge of criticism about economic policy and how the government has handled the trade war, revealing "rare cracks in the ruling Communist Party." Specifically, Reuters notes that the backlash is being felt at the highest levels of the government, hitting a close aide to Xi, his ideology chief and strategist Wang Huning.

Wang, a prominent and influential academic, has recently also come under attack for his strident views on Chinese power: the architect of the “China Dream”, Xi’s vision for China to become a strong and prosperous nation, Wang has been taken to task by the Chinese leader for crafting an excessively nationalistic image for the country, which has only provoked the United States, the sources said.

“He’s in trouble for mishandling the propaganda and hyping up China too much,” said one of the sources, who has ties to China’s leadership and propaganda system.

Naturally, China did not respond to a Reuters request for comment on Wang and his relationship with Xi, or on whether China had erred in its messaging in the trade war. But, in a stark confirmation that the ongoing trade war with the US is taking its toll, there is a growing feeling within the Chinese government that the outlook for China has “become grim”, according to a government policy advisor, following the deterioration in relations between China and the United States over trade.

Other influential policy makers have echoed the sentiment:

“Many economists and intellectuals are upset about China’s trade war policies,” an academic at a Chinese policy think tank told Reuters, speaking on condition of anonymity due to the sensitivity of the issue. “The overarching view is that China’s current stance has been too hard-line and the leadership has clearly misjudged the situation.”

The reason for the disappointment is that this view - which has quickly gained dominance - contrasts with the popular thinking at the beginning of the year of many Chinese academics "who had touted China’s ability to withstand the trade row in the face of Trump’s perceived political weakness at home."

China thought it had reached a deal with Washington in May to avoid a trade war, but was shocked when the Trump administration, in Beijing’s eyes, went back on that agreement.

“The evolution from a trade conflict to trade war has made people rethink things,” the policy advisor said. “This is seen as being related to the exaggeration of China’s strength by some Chinese institutions and scholars that have influenced the U.S. perceptions and even domestic views.”

And in what will come as welcome news to Trump this morning, one official who is familiar with China’s propaganda efforts said the messaging had gone astray: "In the trade war, the line of thinking in the propaganda has been that Trump is crazy,” said the official. “In fact, what he is scared of is us getting strong."

That view is correct, and it is surprising that it has dawned on China only now: after all Trump and Navarro have long declared that their true motive is to slow down China's ascent by any means necessary, not merely reshaping the US trade deficit with China.

It also explains the growing backlash to China's repeated nationalistic message.

Under Xi, officials have become increasingly confident in proclaiming what they see as China’s rightful place as a world leader, casting off a long-held maxim of Deng Xiaoping, the former paramount leader who said the country needed to “bide its time and hide its strength”.

Hu Angang, an economics professor at Tsinghua University and an expert in the field of “Chinese exceptionalism”, is one prominent advocate for the view that China has achieved “comprehensive national power”. However, as the Chinese stock market has tumbled in recent weeks, Hu has faced a public backlash, with critics blaming him for making the United States wary of China by trumpeting and exaggerating its relative economic, technical and military might.

It is unclear if Wang, the propaganda boss, will face any consequences Reuters writes, and there may be other reasons for the tensions within the party related to him.

Meanwhile, as official media has in recent days been filled with defiant commentary regarding the United States and the trade war, there have been signs of a shift in China’s messaging, demonstrated mainly by Beijing's downplaying of Made in China 2025, the state-backed industrial policy that is core to Washington’s complaints about the country’s technological ambitions.

Still, "the thinking in Chinese government circles is that the damage has already been done", and that China has learned the hard way that its domestic propaganda is now being scrutinized abroad in a way it never was before.

“It’s impossible for China to ‘bide its time and hide its strength’, but at least we can control the volume of our own propaganda and tell China’s story the proper way,” the policy insider said.

“When the size of China’s economy was small, it got little outside attention but China is now closely watched.”

That said, there is little tangible change observed in what has now become a daily media invective: on Thursday, Chinese state media accused the United States of a “mobster mentality” in its move to implement additional tariffs on Chinese goods, and warned Beijing had all the necessary means to fight back.

“The two countries’ trade conflict, which is merely push and shove at the moment, is likely to escalate into more than just a scuffle if the U.S. administration cannot marshal its mobster mentality,” state newspaper China Daily said in an editorial.

“China continues to do its utmost to avoid a trade war, but in the face of the U.S.’s ever greater demand for protection money, China has no choice but to fight back,” it said.

On its early morning news show, state broadcaster CCTV said that "China has confidence in protecting its own interests, has many means."

Another commentary, written by China Institute of International Studies research fellow Jia Xiudong and published in the overseas edition of the People’s Daily newspaper, said the United States was trying to “suppress China’s development”.

Of course, that's completely accurate, and goes to the real tension between the two nations, of which trade war is just one manifestation.


William Dorritt Everybodys All… Thu, 08/09/2018 - 09:07 Permalink

Might have been Feinsteins office manager aka touched all info coming in and out of her office aka Classified Info.

Feinstein and her husband profited substantially from China Business deals that didn't help the US.


"WASHINGTON — On Capitol Hill, Sen. Dianne Feinstein (D-Calif.) has emerged as one of the staunchest proponents of closer U.S. relations with China, fighting for permanent most-favored-nation trading status for Beijing.

At the same time, far from the spotlight, Feinstein's husband, Richard C. Blum, has expanded his private business interests in China--to the point that his firm is now a prominent investor inside the communist nation.

For years, Feinstein and Blum have insisted that they maintained a solid "firewall" between her role as an influential foreign policy player and his career as a private investor overseas."




Feinstein is another Dual Passport Israeli with US Citizenship


In reply to by Everybodys All…

mkkby blueseas Thu, 08/09/2018 - 20:16 Permalink

As I've said here for months, china's economy is fragile and can easily break.  Just the threat of tariffs has panicked their stock and f/x markets.  US markets are still near record highs.

Go Trump.  Cut off all trade until there is no more I/P theft, no more fake island grabbing and no more trade barriers.  If china insists on being a career criminal, set them back 50 years to when they were all poor dirt farmers.

Before long Pooh bear will be begging for forgiveness on his hands and knees.  That's when you deliver the kick to the throat.



In reply to by blueseas

lasvegaspersona Ghost of PartysOver Thu, 08/09/2018 - 10:07 Permalink

Trump needs to end the reserve currency status of the dollar if he wants industry to return to the heartland. Triffin's Dilemma and such...

Bankers will not like this as they profit from selling our debt.

In China there are many interests as well. This problem cannot be understood as looking at the trade issues as a "US vs China" process.

To be able to create necessary industry to produce items of self defense completely on our shores a lot needs to change. Some will benefit (US workers) some will lose (big banks . and politicians who get to spend the money we now so easily borrow.)

I observe that Democrats, who claim to champion US workers, oppose Trump in these efforts. I think it is because they do not understand what is really happening.

In reply to by Ghost of PartysOver

MEFOBILLS lasvegaspersona Thu, 08/09/2018 - 11:45 Permalink

I observe that Democrats, who claim to champion US worker


The democrats, especially after Clinton's "new democratic party" are the champion of wall street.  No banker was jailed by Holder's justice department, on order's from Obama.


They oppose Trump because he is reshaping the Republican party to be nationalist.  Even the Koch brothers have been kicked out.  Neo Cohens are also leaving the republican party, and returning to their home - the democratic party.


Using identity politics is a divide and conquer strategy, so that plutocratic (finance mostly) can continue their rental thefts, and be masters of the universe.  This is very much the democratic party of today, not the Trump republicans.  


Swamp dwelling republicans are being handed their asses in the recent elections, and expect this to continue.  The "blue wave" is really a red wave.

In reply to by lasvegaspersona

Free This B-Bond Thu, 08/09/2018 - 09:54 Permalink

China never had a chance, they have overplayed their hand and will be at the table soon enough!

They can't afford to lose the American market, they make cheap crap that falls apart or breaks about after a few uses. They push quantity of quality anyway.

Just a bunch of trash and America needs to get our mfg back, and start to make quality stuff.

In reply to by B-Bond

the artist Free This Thu, 08/09/2018 - 12:22 Permalink

China is getting hemmed in. 

From Buddhism, they are the Preta, or "Hungry Ghost". Creatures with enormous bellies and throats as thin as a needle. 

The world and its resources, as we know it, literally cannot survive their "success" and so the world power structure will contain the Dragon. 

Its not personal, it is thermodynamic. 

In reply to by Free This

novictim the artist Thu, 08/09/2018 - 14:44 Permalink

You are being too generous.  China is not what it has claimed to be on paper.  Start with that reality and then see China as the mismanaged fugazi conjob that it is. 


"Hurry up and invest in China before they leave you behind!!  Hurry, hurry!  No time to look under the hood!  Get in now before it takes off!"  Your Financial Advisor after doing a line of cocaine off a hookers ass.

In reply to by the artist

I am Groot Free This Thu, 08/09/2018 - 13:45 Permalink

The US needs to cut trade with China and watch their economy implode. The US can get cheap shit from Vietnam, South Korea, India, Bangladesh, Japan, and other countries. No sense funding someone who is our obvious enemy. Sadly most manufacturing jobs won't come back because America was sold out by corporations and the unquenchable greed for profits at any and all costs.

In reply to by Free This

vladiki Free This Thu, 08/09/2018 - 19:13 Permalink

Don't overdo it.  They're not trash. And most developing nations start by making crap ... Germany a century ago, Japan 50 years ago.  They then move up the quality chain.

But Trump's right about all this and has the balls to do something about it - unlike the elegant, useless Obama ("The Great Spectator"... "The Commentator in Chief") who simply watched as the US manufacturing base was gutted. What a dud he was.  The US has most of the cards and will win.  But Trump needs to stop crowing so that China can quietly let him win.  They're not stupid.  Best to back your opponent into a corner, leaving him YOUR planned escape route.

No surprise that Xi's 'overplayed his hand'.  You have firm control of 1.3 billion at home, and everyone bows and scrapes to you. After a while you begin to believe you're half God, and expect the world to do the same. Education time for Xi, and he's smart enough to learn.

In reply to by Free This

rtb61 William Dorritt Thu, 08/09/2018 - 17:11 Permalink

The government of China's trade war reaction might seem over the top, as the tariffs have nothing much to do with trade and a more about shifting taxes from the rich to the poor, nothing more that Walmart sales tax, targeting the poor, making them pay to fund the next tax cut for the richest but of course China does not care about that, their responses are a result of US interference, in China's Africa investments.

So although the tariffs are nothing more than taxes on the poorest in the US, they used it as an excuse to push back, first for the North Korea gambit designed by the US to cripple China's global involvement and then the US trying to incite greater conflict in Africa to attack China investments in Africa.

Corporations in China have a lot of power due to direct political connections and when they are acted against in a criminal fashion, they will respond in a criminal fashion and those connections much like US Corporate Contractors and the US Military Espionage complex, will generate similarly aggressive responses.

The China spy machine is powering up to counter the corrupting influence of the CIA and the Corporate contractors who control it. Whilst the US craps on about Russia, it is actually China who is making the much greater moves, especially with regards to espionage activities. Laying all the groundwork for major activities across the globe, behind Chinese corporations setting up operations in other countries, keeping in mind the connection between government and major corporations in China.

They are stealing a march on US agencies because they are too busy being focused on bullshit, fake wars, inciting terrorism and of course and make no mistake in has become the focus 'CASHING IN', individuals purposefully corrupting efforts to personally profit (generating false data, selective deletion of information, forcing errors to cripple efforts to keep things going, stealing funds, fraud, leaking government data to defence contractors). As they serve corrupt purposes so they become corrupted by them. The greatest threat to the US and it's greatest enemy is the CIA and it's contractors.

In reply to by William Dorritt