Bill Blain: "Xi Is In Much More Trouble Than We Think" | WHAT REALLY HAPPENED

Bill Blain: "Xi Is In Much More Trouble Than We Think"

In terms of market action, trade fears really seem to have settled in as the dominant theme on markets. But if markets are simply wondering when there will be a solution, then they may be waiting for the wrong thing. While the mood remains negative as the market waits for a US/China agreement/resolution, maybe the new long-term reality is an increasingly and deliberately bifurcated global economy? The US and its allies vs China. If it sounds familiar – it should in terms of 1945-89. The West won the last Cold War on the same basis – and the economic benefits accrued to the free capitalist states, a theme the Neo-coms are increasingly banding around. You just imagine the scene in the war room: “This is time Mr President..”

Expect to see this theme develop in coming months. This is no longer a trade spat – this is morphing into full economic war. The US is willing to take a short-term hit in the form of higher consumer prices, and welcome inflation, from Chinese imports until global supply chains re-adjust and new domestic and international lines open, knowing the long-term damage is limited. Meanwhile, the hit to China is long-term and directly on production, thus right across the economy right at the most difficult phase of economic transition. Chinese economists are talking about a 1-2% hit to GDP. I suspect much more plus increased domestic social and political tension. Xi is in more trouble than we think.

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