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Economics

As Trade War Looms, China Wonders Whether It's Up for the Fight

  • Trump tariff threats raise questions about Beijing’s strategy
  • Officials, academics wonder whether Xi misjudged U.S. mood
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ING’s Iris Pang discusses the possibility of a trade war and the reason for the yuan’s decline. (Source: Bloomberg)
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Xi Jinping vowed to match Donald Trump blow for blow in any trade war. Now as one gets closer, some in Beijing are starting to openly wonder whether China is ready for the fight -- an unusually direct challenge to the leadership of the world’s second-largest economy.

In recent weeks, prominent academics have begun to question if China’s slowing, trade-dependent economy can withstand a sustained attack from Trump, which has already started to weigh on stock prices. The sentiments are being expressed in carefully worded essays circulated on China’s heavily censored internet and -- according to interviews in recent days with ministry officials and foreign diplomats who asked not to be identified -- repeated in the halls of government offices, too.