Jim Rickards: A Shooting War With China Is Much More Likely Than You Think

Sunday, August 26, 2018
By Paul Martin

SilverDoctors.com
August 26, 2018

Jim says China doesn’t want a war, but if there’s enough trouble in the domestic economy, China might look to divert the nation’s attention away from it…

by Jim Rickards via Daily Reckoning

The mainstream media narrative about the U.S.-China trade war implies that Trump is on a highly damaging ego trip and China holds all the cards.

The exact opposite is true.

Trump has ample financial warfare weapons including tariffs, penalties, bans on direct investment, improved cybersecurity, forced divestiture and freezing of assets.

Meanwhile, China has almost run out of room to impose tariffs. Further, they will invite retribution if they try to devalue their currency further.

China’s vulnerabilities run deeper than that.

The U.S.-China trade war comes in the aftermath of a Chinese Communist Party conference that made Xi Jinping dictator for life and enshrined his doctrines on the same level as Mao Zedong.

Once Xi got these powers, he proceeded on a disastrous policy course that has resulted in a slowdown of the Chinese economy, higher debt defaults, lost investment opportunities in the U.S. and declining hard currency reserves.

The knives are now out in Beijing.

Reports are circulating that Xi’s opponents are questioning his judgment and the wisdom of expanding his powers at such a critical time. Many are starting to blame Xi for the trade war almost as much as they blame Trump.

Xi still has torture, firing squads and concentration camps at his disposal, but the notion of a unified, coherent leadership structure in Beijing is now seen to be a myth.

Trump will keep up the pressure; he never backs off and always doubles down. It will be up to Xi to blink and acquiesce in many U.S. demands.

The U.S. will win this trade war because Xi does not want to lose his throne. Yet there will still be material damage to the global economy and lasting animosity between Xi and Trump.

But there’s more to the U.S.-China dispute than trade.

Yes, headlines and TV interviews are dominated by talk of the trade war. That escalating confrontation is a big deal, but it’s not the only flash point in U.S.-China relations, and not even the most important.

China is as much concerned about a military confrontation in the South China Sea as it is about the economic confrontation in the trade wars.

The Rest…HERE

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