How China Can Weather Trump’s Trade War
On this episode of Trumponomics, economist Nouriel Roubini explains the various tools Beijing has to absorb economic blows—and strike back.
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On this week’s episode of Trumponomics, we speak with economist Nouriel Roubini about the all-out trade war US President Donald Trump has kicked off with China, and why it’s a conflict Chinese leader Xi Jinping might think he can weather—and even win.
Beijing has responded to Trump’s scattershot tariffs in an orderly, escalatory fashion. In recent days, it’s ordered Chinese airlines to halt new Boeing jet deliveries and banned the export of some rare minerals. Those moves came after Trump’s dramatic levy increases of up to 145% on some Chinese goods. China in return raised its tariffs on US products to 125%.
Trump, who has repeatedly demanded that Xi call him to start negotiations, insists “the ball is in China’s court.” But renowned economist Nouriel Roubini, currently a senior adviser at Hudson Bay Capital Management, warns that Xi and his deputies are adamant that China can withstand more economic and political suffering than the US.
China has a philosophy of “suffering for the sake of the country,” Roubini says, and the world’s second-largest economy has more policy options to offset the impact of any tariff shock on growth. Those include massive fiscal stimulus as well as monetary and credit easing, both of which are not options for a monstrously indebted America.