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Comment by rrggrr | Hacker News Reader

I suspect Xi wants this dispute to continue for internal Chinese reasons. The tariffs impact different sectors and regions in China differently. It may be continued tariffs are reducing overcapacity in a manner that allows Xi to save face internally. It could be the tarrifs are breaking the back of powerful exporting provinces (eg. Jiagnsu) and helping Xi consolidate power. It may also be the case that things need to get much worse in China economically before Xi has a strong enough argument to persuade the Chinese military (a powerful economic force itself) to embrace a deal. Finally, the success of the Belt&Road strategy requires a shift from US/Western export to vast investment elsewhere; and it may be the case these tariffs provide the Chinese private sector a strong incentive to open new markets and long-haul decrease reliance on the US. Its complicated. I suspect a deal will be reached in 2-4 months.

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> continued tariffs are reducing overcapacity

How will that work? I only see them increasing the overcapacity as the market for commodity stuff gets even smaller

> success of the Belt&Road strategy requires a shift from US/Western export to vast investment elsewhere;

China had almost 20 years to do so, but Chinese companies were blindly charging ahead into US market. Only very recently, the business community began to realise that the rest of the world is "not so bad" business-wise." Xiaomi and BBK brands were a hit in India, but their C-levels ignored India up until they were almost buried in money from Indian market.

That makes more sense to me than this whole "China is waiting for the US elections" stuff.

China pushing back publicly (rather than making a deal and then ... simply not following through) against the US doesn't play well in the US as far as getting someone they want elected. Americans hurting economically are the folks cheering on Trump to some extent (well a vocal portion) and aren't likely to back a deal that isn't perceived to be favorable.

If the administration in China is playing an internal game, that makes a lot more sense than trying a potentially very counterproductive play in the US.

I don’t know how by cutting down exports Xi plans to consolidate power? Could you please expand on the mechanism by which this could happen? Tariffs are breaking backs of exporting provinces, may be they could be ill informed and Chinese propaganda can spin this to blame US.

Suffering constituencies (provinces, cities, banks, businesses) may have to make substantial concessions to Xi's leadership team/faction to obtain relief. Those concessions may be up front, or favors owed to be collected in the future. Politics 101.

Ruling by fear, anger and hunger. Check out North Korea.

This is a feature of the US administration's approach to negotiation, driven by various motivations. China is not without leverage, and the US will blink first.

The US is in a vastly stronger negotiating position. Damage to US = slightly higher prices at Walmart. Damage to China = lots of people losing jobs.

Xi is being publicly called out by Trump. He cannot fold because the Chinese people are at least as patriotic and nationalistic as your average American.

Instead of making this a civilised conference resolving trade issues its a pissing match between two superpowers. This is exactly the situation that the EU has tried to avoid with its own dealings with these two alpha male gorillas.

If we were dealing with rational countries here there would indeed be a deal. But this isn't a trade dispute between the Netherlands and Switzerland.

If being irrationally angry and unpredictable was such a bad strategy, it wouldn't be so widely deployed. Being an unpredictable tyrant can be extremely effective, most especially against people who are unfailingly polite and civilized. The Kim family (of North Korea) has made excellent use of this strategy, for instance.

How does your theory jive with the fact that his news is censored within China? Wouldn't Xi want it to be public?

None of the politics above implied involvement with the public; the public are generall a periphery in this discussion and possibly a detriment to inform the public too much about the details of what's going on, which would allow the public to speculate and make their own decisions.

His primary audience is party members, military, provincial leadership and the largest economic players.

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