<div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="20" style="height:20px; font-size:0">&nbsp;</td></tr><tr><td style="vertical-align:top"><table cellspacing="0" cellpadding="0" width="100%"><tbody><tr><td style="padding-left:3.5%" a=""><a href="" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank" rel="noopener noreferrer" title="CHINADebate"><img width="100%" src="https://cdn.prod.website-files.com/5c864c33af62620dca1373ac/5d86577f82aa6e55afacb4ea_cd%20long-fit.png" alt="CHINADebate" style="width: 110px;"></a></td><td align="right" style="padding-right:3.5%"><a href="" target="_blank" rel="noopener noreferrer" style="color:#001544; font-size:13px; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;"></a></td></tr></tbody></table></td></tr><tr><td height="30" style="height:30px; font-size:0">&nbsp;</td></tr><tr><td style="text-align:center; line-height:1"><span style="font-size: 42px; font-family: gorditamedium, sans-serif; color:#0970b3; letter-spacing: -1px; line-height: 1;">China Macro Reporter</span></td></tr><tr><td style="text-align:center; line-height:1.5; padding-bottom:30px; padding-top:10px;color:#001544; font-size:0.8125em; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;"><span style="color:#001544; font-size:13px; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;">by Malcolm Riddell<span style="margin:0 6px">·</span>Jan 29, 2020</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:7px; border-left:0px solid #c80000; text-align:center; font-size: 1.5em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">1. Front &amp; Center</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          Coronavirus: Impact on China          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/8FuSjQ?track_p_id=3faf8VyIlK_v6PRF6r3HmTc" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/Q7K3LvBpUHwYzkoXdXm2WUi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/8FuSjQ?track_p_id=dFhAfftBFEkc6X8VyIlK_ip" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Coronavirus: How Can It Impact China’s Economy?&nbsp;</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Bloomberg</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">&nbsp;John Quelch | </strong>Dean, Miami Herbert Business School, University of Miami</h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><br></h3><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">“But it’s worth noting that if China is successful in confining this to Hubei Province, which amounts to 5% of the Chinese GDP, that's a level of aggravation that can be absorbed.”</strong></h2><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><a href="https://www.bloomberg.com/news/videos/2020-01-27/how-can-the-coronavirus-impact-china-s-economy-video" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">Watch</strong></a><strong style="font-weight: bold"> Dean Quelch’s </strong>excellent video interview (10m)</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">&nbsp;</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><span style="color: #d0021b"><strong style="font-weight: bold">Q: </strong></span><strong style="font-weight: bold">“You're just recently back from Shanghai.</strong> Give us a sense, what are the effects right now in China?”</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><span style="color: #d0021b"><strong style="font-weight: bold">John Quelch:</strong></span><strong style="font-weight: bold"> “It's extremely important</strong> for the Chinese government's credibility and legitimacy that they maintain safety and security.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“Hence the a very substantial</strong> and, to use the words of your previous guests, draconian measures to try and get the problem under control.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“There'll be a hit</strong> to consumer confidence and therefore to consumption."</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“The home confinement</strong> of many consumers will result in a reduction in sales at the retail stores, hotels, tourism, travel.”</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“But e-commerce</strong> will be up as retail sales go down.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“One thing</strong> that has not been mentioned is the disruption to supply chains.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“Wuhan</strong> is a very important industrial center - It's essentially the Chicago of Northern China - very big steel producing area, big machinery manufacturing center supplying many components to many companies around China.”</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“So there are supply chains</strong> out of Wuhan that will be disrupted.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“The Chinese government</strong> has postponed the end of the new year festival, so effectively there will be lost production days at Chinese factories as a result of a company workers not being able to get back on the job as they expected.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“The government</strong> has indicated that they are extending the holiday to February 3rd, which would be an additional three days.”</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“And now</strong> there are some indications that in some parts of the country it may be extended to February the 10th.”</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“So it's very unlikely,</strong> given that transportation restrictions will prevent workers from getting to work, that the factories will be opening on schedule right after the end of the official Chinese New Year holiday.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“I would point out</strong> that in the case of SARS the first reported a case was in November of 2002. And the last reported case was in May of 2004.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“There was clear evidence</strong> that the problem had peaked long before that 18 month period concluded.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“Nevertheless,</strong> there is the notion that the coronavirus will be a six-month period of partial disruption to the Chinese economy.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“But it’s worth noting </strong>that if China is successful in confining this to Hubei Province, which amounts to a 5% of the Chinese GDP, that's a level of aggravation that can be absorbed.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“Let me just point out</strong> one last thing: 2020 is the fifth year of the China five year plan.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“And President Xi</strong> and his colleagues will no doubt want to do all they can to hit their numbers in 2020 despite this coronavirus.”</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“What that means</strong> is fiscal stimulus, monetary easing, perhaps even a renegotiation of the tariffs.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          Coronavirus: No Major Economic Stimulus          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/8Y4n3Y?track_p_id=5BU3Ub70SqeE_pFLNIUwyOD" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/4q8YTRvoY7LYzXxssuZgBUi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/8Y4n3Y?track_p_id=1370SqeE_2xzS44hU1sVgeG" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Economic Impact on China  of Coronavirus Will Likely Be Modest</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><em style="font-style: italic"><strong style="font-weight: bold">MacroPolo</strong></em></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Houze Song</strong> | MacroPolo</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><em style="font-style: italic"><strong style="font-weight: bold">&nbsp;</strong></em></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">'Beijing will certainly look to frontload more fiscal expenditure and offer temporary tax relief in a bid to contain the outbreak and help businesses cope with the near-term fallout.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘It is tempting to speculate</strong> that the rapidly evolving epidemic will be hugely disruptive to the Chinese economy.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Yet, a more careful analysis</strong> of the available data to date suggests that such fears may be exaggerated.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The key to this analysis</strong> hinges on having some sense of what the lethality.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Once Hubei province </strong>is removed (the province’s capital Wuhan is the epicenter of the disease), the national level mortality rate drops to 0.3%, not much different from a typical flu season.’&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Assuming containment</strong> is effective and the outbreak does not take a turn for the worst, then the current level of fear and uncertainty will likely soon dissipate.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In what may be</strong> a small dose of good news, a credible Chinese official who led the fight on SARS suggested that the epidemic may&nbsp;<a href="http://www.caixin.com/2020-01-28/101509118.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">peak in about two weeks</a>.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘What this estimate implies</strong> is that in another two weeks, the number of infections will increase by eight-fold, based on the&nbsp;<a href="https://news.ifeng.com/c/7tavGkcpDVY" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">estimated pace</a>&nbsp;of spread.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘That will bring</strong> the eventual total infections to around 120,000 cases (current confirmed and suspected cases are around 15,000)—a significant figure to be sure, but it represents less than 0.01% of Chinese population.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><em style="font-style: italic"><strong style="font-weight: bold">‘If</strong></em><strong style="font-weight: bold">&nbsp;that scenario materializes</strong> in a few weeks, then the impact on the Chinese public’s consumption patterns and other economic activities should be temporary and modest.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">'People will be more willing</strong> to find solutions, such as remote work or shop online.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Moreover,</strong> the current widespread excess capacity in the Chinese economy will help to mitigate the impact of supply disruptions as a result of transportation restrictions and the extended holiday.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In the coming weeks,</strong> Beijing will certainly look to frontload more fiscal expenditure and offer temporary tax relief in a bid to contain the outbreak and help businesses cope with the near-term fallout.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘But the support</strong> will likely be mild and does not change our base case of no major stimulus in the&nbsp;<a href="https://macropolo.org/analysis/economy-stabilized-recovery-weak-1q2020/" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">1Q2020 outlook</a>.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;">‘<strong style="font-weight: bold">In the meantime,</strong> the Chinese central bank will also provide ample liquidity to prevent a psychology of fear from freezing the financial sector, but it is unlikely to take more drastic actions such as cutting interest rates or reserve requirement ratios.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">2. Keep an Eye On</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          Trade Deal: Financial Services          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/8qF7Ng?track_p_id=1h6MIbk6_kfvdtgUDaNRYE5" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/TiISon2f36FD5_ms-2WONki__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/8qF7Ng?track_p_id=7aJI6CWj6MIbk6_T4xU%40VpU" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Did the US-China phase one deal deliver a win for US financial services?</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Peterson Institute for International Economics (PIIE)</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Martin Chorzempa</strong> | PIIE</h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><br></h3><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘Beyond a headline opening of a sector of China’s financial services &nbsp;are the multitude of rules that can keep foreign firms from entering or expanding.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘China did promise</strong> greater access for US financial and insurance companies.</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">as part of the “phase one” accord.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘But Beijing had announced</strong> or implemented almost all of its concessions already - as can be seen in the table below -, in part because Chinese officials increasingly understood that foreign competition in these areas was in China’s own interest.’’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘And opening up finance</strong> appears to have been less costly politically for China than making concessions such as ending subsidies to state firms, which would have required it to make more fundamental changes to its growth model.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Beyond a headline opening</strong> of a sector are the multitude of rules that can keep foreign firms from entering or expanding. The agreement’s approach to eliminating these barriers is strangely&nbsp;<a href="https://www.csis.org/analysis/does-phase-one-china-deal-measure-depends-how-you-measure" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">uneven</a>.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In insurance,</strong> China’s promises are broad: “remove any business scope limitations, discriminatory regulatory processes and requirements…”, but that language is missing in the other sectors, where only specifically identified barriers are slated for removal.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Chinese officials</strong> could easily add new discriminatory rules in the other sectors to replace those they promised to eliminate, without violating the deal’s provisions.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The section on electronic payment services,</strong> attempting to right one of China’s most frustrating WTO violations, also left loopholes.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘China’s promises</strong> apply only to card payments, not fintech payment providers that dispense with cards—though importantly US-based PayPal was unexpectedly granted a license, before the deal was signed, by acquiring a 70 percent stake in a Chinese payment company.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The deal states,</strong> “China shall accept the license application of…Mastercard, Visa, or American Express,” and sets time limits on the acceptable delay between the early steps of the approval process. A time limit for the final approval, however, is missing, leaving China room to stretch it out indefinitely.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Even if there were a time limit,</strong> China’s central bank could always find a pretext to deny a license.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘And entry of US credit card firms</strong> into China may have come too late for some.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘China’s financial firms</strong> are far more competitive than they were when its financial markets were supposed to open in 2006.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Mobile payments</strong> from Alipay and WeChat have led Chinese consumers to mostly skip credit cards offered by Visa and Mastercard altogether.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘China may have agreed</strong> to the latest deal simply because it judged that its players no longer had much to fear from foreign competition.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/2qROsDDd3Wdi35KXBWfxYDl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          Bonds          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/98PRho?track_p_id=2HP5ueux4_WF5KxFXgMtGhE" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/aAnPTLzZf0sVHGSukmEafEi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/98PRho?track_p_id=dBfgsByVkAFTgZ5ueux4_Oo" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Chart of the Day: More Bonds, More Defaults&nbsp;</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Caixin</strong></h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">&nbsp;</strong></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘Corporate bond defaults hit a record high in 2019 amid slowing economic growth and increasing financial pressure on the private sector.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘China’s bond market</strong> has boomed over the last few years to become the world’s second largest, with 99.1 trillion yuan of outstanding onshore bonds as of the end of 2019,&nbsp;<a href="http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3960639/index.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">central bank data</a>&nbsp;(link in Chinese) show.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The year saw issuance</strong> of 45.3 trillion yuan in new bonds, up 3.1% from the previous year, including 9.7 trillion yuan of corporate bonds, accounting for 21.4% of the total.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Corporate bond defaults</strong> hit a record high in 2019 amid slowing economic growth and increasing financial pressure on the private sector.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘According to a January report</strong> from China International Capital Corp. (CICC), 42 companies went into default for the first time last year.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Overall, there were 169 newly defaulted bonds,</strong> involving total principal of 153.5 billion yuan ($22.4 billion), up from 116 defaults involving 117.1 billion yuan in 2018.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Since China recorded</strong> its first corporate bond default in 2014, the country had seen a total of 369 as of the end of last year, involving principal of 344 billion yuan, CICC analysts said in the report.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The value of the defaulted bonds </strong>accounted for about 1.6% of the total issued by nonfinancial companies.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Most of the defaulting companies</strong> are privately held, rather than state-owned enterprises (SOEs).’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘These companies</strong> are more vulnerable than state-owned SOEs in an economic slowdown as lenders tend to consider SOEs lower-risk, continuing to fund them on the assumption that there is an “implicit guarantee,” which means governments will come to their rescue if they are caught in a crisis.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Poor risk management</strong> by privately owned companies and regulatory efforts to reduce debt levels in recent years have also added to default risks.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘From January to November</strong>, privately owned companies accounted for 77.8% of all the new defaulters, said a&nbsp;<a href="https://www.dfratings.com/index.php?g=Portal&amp;m=Lists&amp;a=view&amp;aid=919" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">report&nbsp;</strong></a>(link in Chinese) by ratings agency Golden Credit Rating International Co. Ltd.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Bond investors</strong> are now reluctant to buy bonds issued by privately owned companies after so many defaults.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Another problem facing</strong> bond investors is the slow process for&nbsp;<a href="https://www.caixinglobal.com/2019-12-30/in-depth-china-responds-to-default-wave-with-new-legal-frameworks-101499147.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">handling bond defaults</a>.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘An underdeveloped junk bond</strong> market and limited trading channels for defaulted debts have made it difficult for holders of defaulted bonds to recoup their losses.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/YpM0bZ8gPHA2lO5zLoalRjl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">3. Below the Radar</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          A Vulnerabloe World Economy           </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/4l2vM8?track_p_id=1D8Ffk1m_rplezGHNr4GzmL" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/Tad6xj_ebVw7qqeNRLm3H0i__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/4l2vM8?track_p_id=7M6wfTAr8Ffk1m_yylZxN5S" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">A Global Economy Without a Cushion</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Project Syndicate</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Stephen Roach</strong> | Yale</h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><br></h3><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;">&nbsp;<strong style="font-weight: bold">'From 1990 to 2008, annual growth in world trade was fully 82% faster than world GDP growth.&nbsp;</strong></h2><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">Now, however, reflecting the unusually sharp post-crisis slowdown in global trade growth, this cushion has shrunk dramatically, to just 13% over the 2010-19 period, leaving the world economy more vulnerable to all-too-frequent shocks.'</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘According to the IMF’s&nbsp;</strong><a href="https://www.imf.org/en/Publications/WEO/Issues/2020/01/20/weo-update-january2020" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">latest estimates</strong></a><strong style="font-weight: bold">,</strong> world GDP grew by just 2.9% in 2019 – the weakest performance since the outright contraction in the depths of the global financial crisis in 2009 and far short of the 3.8% pace of post-crisis recovery over the 2010-18 period.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘For global business-cycle analysts,</strong> the 2.5-3.5% growth band is considered the danger zone.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘When world output growth</strong> slips to the lower half of that range – as it did in 2019 – the risks of global recession need to be taken seriously.’&nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Last year’s shortfall</strong> from trend brought growth uncomfortably close to the widely accepted&nbsp;<a href="https://www.imf.org/en/Publications/Books/Issues/2018/02/26/Collapse-and-Revival-Understanding-Global-Recessions-and-Recoveries-40897" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">global recession threshold of</a> approximately 2.5%.'</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Downside risks</strong> are especially worrisome, because a 2.9% growth outcome for the world economy underscores the lack of a comfortable cushion in the event of a shock.’&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Historically,</strong> the rapid expansion of cross-border trade has been an important part of the global growth cushion that shields the world economy from all-too-frequent shocks.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘From 1990 to 2008,</strong> annual growth in world trade was fully 82% faster than world GDP growth.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Now, however,</strong> reflecting the unusually sharp post-crisis slowdown in global trade growth, this cushion has shrunk dramatically, to just 13% over the 2010-19 period.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The IMF’s&nbsp;</strong><a href="https://www.imf.org/en/Publications/WEO/Issues/2020/01/20/weo-update-january2020" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">latest assessment</strong></a>&nbsp;put global trade growth at just 1% in 2019 – its seventh consecutive downward revision.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Indeed,</strong> last year was the weakest trade performance since the historic 10.4% plunge in 2009, which was the worst contraction since the early 1930s.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘With the world economy</strong> operating dangerously close to stall speed, the confluence of ever-present shocks and a sharply diminished trade cushion raises serious questions about financial markets’ increasingly optimistic view of global economic prospects.’</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;"> Explainers</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          "China is not the problem."          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/53DFgG?track_p_id=4i4jV6gsWfm_nTZoEAHLkGg" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/Tad6xj_ebVw7qqeNRLm3H0i__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/53DFgG?track_p_id=5Sj%40c%406gsWfm_C%406Wwjr5%40M" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">An interview with Keyu Jin</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Project Syndicate</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Keyu Jin</strong> | London School of Economics</h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><br></h3><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">'What China will not do is bow to US demands to transform its development model, say, by weakening state-owned enterprises substantially or eliminating the state’s role in directing strategic economic sectors.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><span style="color: #d0021b"><em style="font-style: italic"><strong style="font-weight: bold">Q:</strong></em></span><em style="font-style: italic"><strong style="font-weight: bold">&nbsp;'Back in 2015,</strong></em><em style="font-style: italic"> you&nbsp;</em><a href="https://www.project-syndicate.org/commentary/china-reform-vested-interests-by-keyu-jin-2015-01" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><em style="font-style: italic">wrote</em></a><em style="font-style: italic">&nbsp;that “fundamental conflicts of interest and subtle resistance mechanisms” were blocking progress on Chinese reform.’</em></p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><em style="font-style: italic"><strong style="font-weight: bold">“Until these barriers are removed,”</strong></em><em style="font-style: italic"> you argued, “there is little hope that China’s slowing economy can rely on reform to give it the push it needs.”’</em></li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><em style="font-style: italic"><strong style="font-weight: bold">‘Five years later,</strong></em><em style="font-style: italic"> China’s economy is still slowing, to the point that some leading Chinese economists are advocating a new round of stimulus.'</em></p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><em style="font-style: italic"><strong style="font-weight: bold">‘Would that help,</strong></em><em style="font-style: italic"> or would it merely take the pressure off policymakers to push on with reform?’</em></li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><span style="color: #d0021b"><strong style="font-weight: bold">KEYU JIN:</strong></span>&nbsp;‘<strong style="font-weight: bold">The current economic </strong>slowdown is not a cyclical phenomenon, but a structural one, so stimulus alone would not be a remedy.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Yes, it could have some effect</strong>, given China’s enduring addiction to credit, but with each round of stimulus, there are diminishing returns.’<br></li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘China would be better served</strong> by pushing ahead with crucial reforms, such as liberalizing the services sector and strengthening the financial system.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘This will take significant political will</strong>, but it is the best way to unleash greater economic dynamism.’<em style="font-style: italic"><strong style="font-weight: bold">&nbsp;</strong></em></li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><span style="color: #d0021b"><em style="font-style: italic"><strong style="font-weight: bold">Q</strong></em></span><em style="font-style: italic"><strong style="font-weight: bold">: ‘If the US did take steps</strong></em><em style="font-style: italic"> to ensure that it was engaging with China on the basis of mutual understanding, would it change the relationship for the better?’</em></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><span style="color: #d0021b"><strong style="font-weight: bold">KEYU:</strong></span><span style="color: #d0021b">&nbsp;</span><strong style="font-weight: bold">'The answer hinges on</strong> whether the US would be able to accept China as a country with a different political and economic model, in which a strong state leads the way in pursuing some economic and social objectives.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘If both sides</strong> can accept and accommodate each other’s differences, there is hope for general peace and stability.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In this sense,</strong> China is not the problem.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Its aspiration remains</strong> to secure a peaceful rise in which it is allowed to flourish without outside interference or confrontations.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘It will continue</strong> to champion a world order in which countries tolerate one another’s differences.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘What China will not do </strong>is bow to US demands to transform its development model, say, by weakening state-owned enterprises substantially or eliminating the state’s role in directing strategic economic sectors.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘If the US continues</strong> to insist on such steps, peaceful coexistence, let alone constructive cooperation, will become impossible.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div>

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<div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="20" style="height:20px; font-size:0">&nbsp;</td></tr><tr><td style="vertical-align:top"><table cellspacing="0" cellpadding="0" width="100%"><tbody><tr><td style="padding-left:3.5%" a=""><a href="" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank" rel="noopener noreferrer" title="CHINADebate"><img width="100%" src="https://cdn.prod.website-files.com/5c864c33af62620dca1373ac/5d86577f82aa6e55afacb4ea_cd%20long-fit.png" alt="CHINADebate" style="width: 110px;"></a></td><td align="right" style="padding-right:3.5%"><a href="" target="_blank" rel="noopener noreferrer" style="color:#001544; font-size:13px; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;"></a></td></tr></tbody></table></td></tr><tr><td height="30" style="height:30px; font-size:0">&nbsp;</td></tr><tr><td style="text-align:center; line-height:1"><span style="font-size: 42px; font-family: gorditamedium, sans-serif; color:#0970b3; letter-spacing: -1px; line-height: 1;">China Macro Reporter</span></td></tr><tr><td style="text-align:center; line-height:1.5; padding-bottom:30px; padding-top:10px;color:#001544; font-size:0.8125em; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;"><span style="color:#001544; font-size:13px; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;">by Malcolm Riddell<span style="margin:0 6px">·</span>Jan 25, 2020</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:20px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">Opening Statement</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/4wPils?track_p_id=5%40am3W6QWRQs_1goNmiwdk2" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/A34-JXbCfNBw6jMh3VQmQEi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/4wPils?track_p_id=dySg1sww6SaJOX6QWRQs_hw" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Eat More Kimchi</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h1 style="display: inline-block;font-size: 1.35em;margin-top: 0em;margin-bottom: 0em;margin-left: 0;margin-right: 0;line-height: 1.35em;font-weight: normal;font-family: gorditamedium, sans-serif;color: #001544;letter-spacing: -0.1px;"><strong style="font-weight: bold">Greetings!</strong>&nbsp;&nbsp;</h1><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">I wish you all a Happy Year of the Rat.</strong>&nbsp;&nbsp;</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">But that greeting</strong> is tempered by the outbreak of the Coronavirus. So perhaps it’s more apt to wish our friends in China a healthy new year. ·&nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Although the virus</strong> has caused deaths, it appears to be less virulent, and less deadly, than SARS. And that is certainly good news in a bad situation.&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">When SARS broke out</strong> in late 2002, I was in China negotiating a Sino-U.S. life insurance joint venture.&nbsp;</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">During</strong> what was supposed to be a brief visit to Seoul, our U.S. client determined SARS was too great a danger and ordered a ban on all travel to China. And that included me.&nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">So I ended up</strong> riding out the epidemic in Korea.&nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">We worried</strong> about our own health, but, since we weren’t at the epicenter in China, worried more about our Chinese friends. &nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Luckily,</strong> no one we knew was infected.&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">And South Korea</strong> was pretty much spared. As for the reason, the <em style="font-style: italic">Seoul Times </em>speculated:&nbsp;</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Despite the worries,</strong> however, there has been no officially known SARS patient here in Korea yet.’&nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Many would wonder</strong> what is keeping SARS from taking over Korea.’ &nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘And Kimchi</strong> could be an answer.’ &nbsp;&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">More below. </strong>Let me know what you think. &nbsp;&nbsp;</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">And, as always,</strong> please forward the <span style="color: #d0021b"><strong style="font-weight: bold">China Macro Reporter</strong></span><span style="color: #d0021b"></span>to your friends and colleagues.&nbsp;</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Best,</strong>&nbsp;</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Malcolm</strong>&nbsp;</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:7px; border-left:0px solid #c80000; text-align:center; font-size: 1.5em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">1. ‘Front &amp; Center’</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          Coronavirus          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/pGBlhmWE8vm9LYrMEkH65zl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/6rdFOy?track_p_id=9L33fXy3p48oeHmA_3mbqZd" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/3FhsnPUbUzdD4Eetrj3Q5Ei__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/6rdFOy?track_p_id=2wU8oeHmA_LnUUvrSLO2Z3Y" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Turning Points: How the Coronavirus Threatens Xi Jinping - Bloomberg</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Bloomberg</strong></h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><br></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">&nbsp;‘Some speculate that the initial delay in raising the alarm may have been less about oblivious local officials than their&nbsp;fear of doing anything&nbsp;without explicit&nbsp;instructions from Beijing.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘President Xi Jinping</strong>&nbsp;faces a crucial test of his rule.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘He has amassed more power</strong> than any leader since Mao, so the response to the health crisis is all on him.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Chinese provincial officials,</strong> a surprisingly independent bunch given the country’s top-down governance model, have always lived by the adage: “The mountains are high, and the emperor is far away.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Indeed,</strong> by the time the modern emperor discovered the&nbsp;<a href="https://www.bloomberg.com/news/articles/2020-01-24/studies-portray-china-virus-as-insidious-and-similar-to-sars" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">true extent of the coronavirus now</a> sweeping through central China, it was too late.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Some speculate</strong> that the initial delay in raising the alarm may have been less about oblivious local officials than their&nbsp;<a href="https://www.bloomberg.com/news/articles/2020-01-23/virus-spurs-panic-buying-of-face-masks-in-sars-scarred-hong-kong" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">fear of doing anything</a>&nbsp;without explicit&nbsp;instructions from Beijing.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The real problem,</strong> according to this analysis, is that Xi’s personality-driven rule is breeding a generation of bureaucrats who don’t feel empowered to make decisions.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“Xi’s lead­er­ship style</strong> has ef­fec­tively in­stilled a ‘wait and see’ at­ti­tude within the bu­reau­cracy,” said Jude Blanchette,&nbsp;<a href="https://www.wsj.com/articles/china-contends-with-questions-over-response-to-viral-outbreak-11579825832" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">a China spe­cial­ist at the Cen­ter for Strate­gic and In­ternational Stud­ies</a>.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘That, he said,</strong> “is leading to slow and hesitant responses from government officials as they wait for pronouncements from Beijing before taking action.”'</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In any event,</strong> after Xi stepped in, the bureaucracy snapped into action.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘We’re now witnessing</strong> the awesome capacity of the Chinese state.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘To take the pressure off</strong> an overwhelmed medical system in Wuhan, a swarm of backhoes immediately started clearing land for a new hospital, with the improbable goal of opening its doors to patients in six days.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘At the same time,</strong> we’re watching the exercise of untrammeled authority that harks back to China’s dynastic past.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The government</strong> declared a&nbsp;<a href="https://www.bloomberg.com/news/videos/2020-01-23/death-toll-increases-from-wuhan-virus-video" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">quarantine of</a> Wuhan and its urban satellites.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘There are few parallels</strong> for sealing off a transport mega-hub of 11 million people.’&nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘And when you add up</strong> all those confined in nearby cities, some 35 million Chinese—the population of Canada—are&nbsp;<a href="https://www.bloomberg.com/opinion/articles/2020-01-23/coronavirus-why-wuhan-is-at-the-center-of-the-viral-outbreak" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">now cut off from the world</a>.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Worse for Xi,</strong> this is all happening on the eve of the Lunar New Year, when tens of millions of Chinese travelers&nbsp;<a href="https://www.bloomberg.com/news/articles/2020-01-22/here-s-how-the-airline-industry-is-dealing-with-the-wuhan-virus" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">are on the move</a>.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Is this a necessary</strong> move that demonstrates the advantages of a command-and-control government?’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Or is it&nbsp;</strong><a href="https://www.bloomberg.com/news/videos/2020-01-23/china-halts-public-travel-from-wuhan-video" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">a wild overreaction by</strong></a><strong style="font-weight: bold"> Xi,</strong> made possible by&nbsp;the absence of checks and balances, public debate&nbsp;and media scrutiny?’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘It’s too early to judge</strong> the effectiveness of XI’s draconian actions.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘But, by the time</strong> this virus burns out, Xi will have further cemented his power&nbsp;or added to his vulnerabilities.’&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/6IxlI0?track_p_id=6lJMUdJ6y1MlS_2IrNslRjs" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/TiISon2f36FD5_ms-2WONki__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/6IxlI0?track_p_id=ecYXegnjJ6oNN336y1MlS_t" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">China's coronavirus health crisis is a threat to its economy</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Peterson Institute for International Economics (PIIE)</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Tianlei Huang | </strong>PIIE</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘The coronavirus health crisis could exacerbate China's economic slowdown.”</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The coronavirus health crisis</strong> is certain to take a toll on China's slowing economy, accompanied by losses already recorded in Chinese stock markets.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The crisis</strong> could exacerbate China's economic slowdown, which was previously forecast by PIIE to deliver 5.9 percent growth this year.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The last time China</strong> was hit by such a major public health crisis was during the 2002–03 outbreak of the Severe Acute Respiratory Syndrome, or "SARS.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘China's economy</strong> was still booming at 10 percent in 2003, the highest since 1995.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Second quarter growth in 2003</strong> was affected most severely, dropping to 9.1 percent, about 1.3 percent lower than the average growth in the other three quarters in the same year.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘After the SARS epidemic,</strong> China adopted an expansionary fiscal policy including tax cuts to help with the recovery of the sectors most affected: transportation, hospitality, retail, and entertainment sectors.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Today China</strong> is running large fiscal deficits and thus has less room to apply fiscal stimulus as it did last time.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘On monetary policy,</strong> the central bank might step up liquidity support, but there will be no credit-fueled stimulus.'</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><a href="https://www.ft.com/content/07e751b2-3e83-11ea-a01a-bae547046735#myft:my-news:page" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">FT.</strong></a><strong style="font-weight: bold"> 'The outbreak prompted S&amp;P Global Ratings&nbsp;</strong>to warn that if it worsened the disease could knock 1.2 percentage points off China’s economic growth this year.'</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">'Wall Street retreated</strong> on Friday after health officials reported a <a href="https://www.ft.com/content/1993db1c-3e59-11ea-a01a-bae547046735" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">second case</a> of coronavirus in the US, handing the S&amp;P 500 its steepest drop in more than three months.'</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">'Oil prices fell</strong> the most in about 13 months this week, reflecting worries that economic fallout from the outbreak would knock demand for fuel.'&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          Adjusting GDP          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/7dhpho?track_p_id=6%4023Bns4lluKU_v6C61uiud" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/aAnPTLzZf0sVHGSukmEafEi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/7dhpho?track_p_id=1R4lluKU_ztNCIIo3Wjs2vy" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Nearly Half of Chinese Local Governments Revise 2018 GDP Down After Economic Census</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Caixin</strong></h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘14 of the 31 provincial-level governments have revised down their 2018 GDP.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘14 of the 31 provincial-level governments</strong> have revised down their 2018 gross domestic product (GDP).’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Some of their revisions</strong> are due to<a href="http://www.stats.gov.cn/tjfw/bgt2018/201912/t20191230_1720564.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">Beijing’s crackdown</strong></a>&nbsp;(link in Chinese) on local governments falsifying data to exaggerate their economic performance.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Those making</strong> the biggest adjustments in their 2018 GDP:’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Tianjin municipality,</strong> down by&nbsp;<a href="http://stats.tj.gov.cn/Item/29333.aspx" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">29%</strong></a>(link in Chinese)’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Jilin Province,</strong> down by <a href="http://tjj.jl.gov.cn/tjsj/qwfb/202001/t20200122_6549403.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">3%</strong></a>(link in Chinese)’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Heilongjiang Province,</strong> down by 5%.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘17 provincial-level governments</strong> revised their 2018 GDP upwards.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The 2018 economy</strong> of Southwest China’s Yunnan province was <a href="http://ynxwfb.yn.gov.cn/html/2020/zuixinfabu_0120/2209.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">8% larger</a> than originally estimated.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In November,</strong> the National Bureau of Statistics (NBS) revised the national 2018 GDP figure up by 2.1% in the wake of the national economic census.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘This is the smallest</strong> of four upward adjustments made after censuses in 2004, 2008, 2013 and 2018.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The revision</strong> may nonetheless help ease pressure on the government to stimulate the economy to ensure it achieves the target of doubling real GDP from 2010 levels by 2020.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘An NBS official</strong>&nbsp;<a href="https://www.caixinglobal.com/2019-11-21/china-wont-use-census-to-raise-gdp-growth-statistics-official-101485889.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">said last year&nbsp;</strong></a>that China would not arbitrarily adjust economic data from previous years to make the growth target easier to hit.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“I want to emphasize</strong> that GDP accounting is not influenced by other factors, only by principles of accounting methodology and changes in data sources,” Li Xiaochao, a deputy head of the NBS said in November.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/UOlYazz57Mb3STqFeJexDDl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">2. ‘Keep an Eye On’</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          Return to the 19th Centruy?          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/8c1aqW?track_p_id=eeNk2tBC3wdnWDt7i06ms_L" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/3QKIJ28TXRxlm_PNLipujEi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/8c1aqW?track_p_id=dSQ3YiPWgZhGIY7i06ms_3c" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">A Worrying Return to Managed Trade</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">New York Times</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Keith Bradsher</strong> | New York Times</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">&nbsp;</strong></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">“In a worrying return to 19th-century practices&nbsp;of managed trade, the ‘shopping list’ imposed by the deal could be seen as going against the rules-based international trading system.”&nbsp;</strong></h2><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Joerg Wuttke</strong>, the president of the European Union Chamber of Commerce in China</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘When the United States and China</strong> reached&nbsp;<a href="https://www.nytimes.com/2020/01/15/business/economy/china-trade-deal.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">a temporary truce</a>&nbsp;in their costly trade war last week, many wondered how Beijing could live up to its commitment to buy $200 billion more of American-made goods over two years.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Surely, critics said,</strong> China will either renege on the deal, or it will switch to buying products from American farms and factories that it is currently purchasing from other countries.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In the halls of Davos,</strong> two realities were becoming clear:’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘China plans</strong> to honor the deal, and’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Everybody except the United States</strong> may be about to lose a lot of business.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Should China</strong> soon begin to purchase the billions of dollars of American goods at the expense of Washington’s allies, it would highlight a central irony of the trade truce.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The United States</strong> has long complained that Beijing controls the levers of Chinese trade and uses them for political advantage.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘State-run grain companies</strong> buy American soybeans. State-run airlines buy Boeing planes.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘When Beijing</strong> is displeased with Washington, it can shift those purchases elsewhere, hurting&nbsp;<a href="https://www.nytimes.com/2019/08/27/us/politics/trump-farmers-china-trade.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">American workers</a>.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The United States</strong> has called for the Chinese government to relax its grip and allow freer, fairer trade.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Freer, fairer trade</strong> would have made last week’s deal virtually impossible, however.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Chinese businesses</strong> would not and could not buy $200 billion more in American grain, energy and equipment over two years unless Beijing told them to.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The trade pact</strong> allows Chinese buyers to go elsewhere if American goods are more costly than products from other countries.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘But Beijing</strong> can tell state-run companies that they have more than profitability to think about.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“In a worrying return</strong> to 19th-century practices&nbsp;<a href="https://www.nytimes.com/2019/12/17/business/trump-trade-deals-free-markets.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">of managed trade</a>, the ‘shopping list’ imposed by the deal could be seen as going against the rules-based international trading system,” said Joerg Wuttke, the president of the European Union Chamber of Commerce in China.’</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">3. ‘Below the Radar’</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          Crumbs on the Belt &amp; Road          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/6SpK3k?track_p_id=05Z9pug_mhybCdhpn1z26sI" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/UhpUPMCJFye7fkL4IvWfEki__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/6SpK3k?track_p_id=05Z9pug_GvrmBhN3dTfJ455" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">European Involvement In China's Belt And Road Initiative</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">European Union Chamber of Commerce in China</strong></h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">&nbsp;</strong></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘Given the scale of the BRI, most respondents refer to their level of involvement as “crumbs from the table.”'</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The European Union Chamber of Commerce in China</strong> (European Chamber) today released&nbsp;<a href="https://static.europeanchamber.com.cn/upload/documents/documents/The_Road_Less_Travelled[762].pdf" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><em style="font-style: italic">The Road Less Travelled: European Involvement in China’s Belt and Road Initiative</em>&nbsp;(BRI).’</a></p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Based on a member survey</strong> and extensive interviews, the report highlights the peripheral role currently played by European business in the BRI, as well as the competition-blunting effects that the Beijing-led scheme is having on business worldwide.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Only 20 of 132 survey respondents</strong> report having bid on a BRI-related project.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Most cite</strong> the lack of transparent bidding and procurement processes as a major barrier to participation, with only two having found projects through publicly available information.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Of those that have participated,</strong> most have done so after being pulled in by business partners or local governments.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘All but a scant few</strong> have&nbsp;played niche roles, like providing certain technology or experience in the recipient country.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Given the scale of the BRI,</strong> most respondents refer to their level of involvement as “crumbs from the table”.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘This reflects the reality</strong> that the BRI is largely business as usual for European companies operating in China, which have grown accustomed to pursuing opportunities that are limited and selective.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“China’s colossal national champions</strong>—boosted by state-aid and cheap financing—are securing an unusually large proportion of contracts when compared to multilateral development schemes,” said Joerg Wuttke, president of the European Union Chamber of Commerce in China.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“Europe needs to determine</strong> how to respond to this export of the China model to shield itself from market distortions and stay competitive in third-country markets.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/2P5lE8ktJ09yp9j90m_xmzl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;"> ‘Explainers’</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          Hong Kong: 'One Country, Two Systems'          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/6BnOFs?track_p_id=8KdZLgqeF6yAAKU_hPPJpaP" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/wczHIBwO8dI5tffXNpoNi0i__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/6BnOFs?track_p_id=9CZuP1Iuyj6yAAKU_PPc%40ZP" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Hong Kong: The Rise and Fall of "One Country, Two Systems"</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Harvard Kennedy School</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Bill Overholt |</strong> Harvard Kennedy School</h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><br></h3><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘Hong Kong Chief Executives have no experience defending their city’s interests against pressure from above—something any Shanghai mayor would do with alacrity.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">In just 25 pages,</strong> Bill Overholt describes the history of “one country, two systems,’ its flaws, and how it might be reinvigorated – a concise, comprehensive, and masterful analysis.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">What distinguishes Bill’s work</strong> is that he was a witness to and sometimes a participant in the events that he is writing about.</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Bill’s anecdotes</strong> from a career on the frontlines in Hong Kong, China, Taiwan, the Philippines, Korea, and elsewhere are fascinating, whether he is conveying them in conversation or in writing. And this study is sprinkled with them.</li></ul><p style="text-align: left;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">I couldn’t do justice</strong> to the breadth of this work in a short summary. So I have focused on two points I found especially interesting.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">But you should read</strong> the entire essay.</li></ul><p style="text-align: center;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">_________________________________</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The idea of “one country, two systems”</strong> originated in 1979, when China offered to allow Taiwan to keep its economic and social systems, government, and even military in return for acknowledging that it was part of the People’s Republic. Taiwan rejected that proposal.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The plan’s architect, Deng Xiaoping,</strong> next used the idea to resolve an emergent crisis over Hong Kong: The biggest section of Hong Kong, the New Territories, was scheduled to revert from British to mainland rule in 1997.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Crises and protests</strong> in Hong Kong over the past several years highlight ‘fundamental flaws in the conception of “one country, two systems.” One of these is that China conceptualized Hong Kong as a business entity, not a polity, so it has a chief executive, not a mayor or governor.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘To fill the chief executive role</strong> China chooses business executives and civil servants—mostly well-meaning people with no political skills.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘They have no idea</strong> how to mobilize popular support or mediate conflicts.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘They have no experience</strong> defending their city’s interests against pressure from above—something any Shanghai mayor would do with alacrity.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘They have no idea</strong> how to reassure Beijing about Hong Kong or to reassure local people that their interests will be protected.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘No mainland city</strong> would ever be governed by someone with negligible political skills.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The problem</strong> is that Hong Kong is a polity, not a business unit.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘This can be solved</strong> only by creating a more competitive political process that trains leaders.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          Tech Save China          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/5hUi7U?track_p_id=eKZnyWIxLaOtQSy7GFop4_H" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/3QKIJ28TXRxlm_PNLipujEi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/5hUi7U?track_p_id=5oTnDk7GFop4_jCpfLnOy14" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">How Technology Saved China’s Economy&nbsp;</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">New York Times</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Ruchir Sharma</strong> | chief global strategist, Morgan Stanley Investment Management&nbsp;</h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><br></h3><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘China is effectively creating a new consumer culture behind protectionist walls as a tool of political control and an engine of economic growth.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘China is effectively</strong> creating a new consumer culture behind protectionist walls as a tool of political control and an engine of economic growth.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘It comes </strong>at a crucial moment.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Flash back to 2015,</strong> when China appeared to be on the verge of the first recession since it began reforming the economy, four decades ago.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘China’s average income</strong> had reached the middle-class phase when developing economies often stagnate.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Its working-age population</strong> had just started to shrink.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Runaway lending,</strong> unleashed by Beijing to fight off the global recession of 2008, had pushed private debts to 230 percent of gross domestic product, up from 150 percent.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘This was the largest borrowing spree</strong> ever in the emerging world, and binges that size had always led to major downturns.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘But while China’s growth has slowed,</strong> according to official numbers, from double digits in 2010 to barely 6 percent, it has yet to suffer its first recession.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘What changed</strong> was the unexpectedly rapid rise of a new digital economy, now estimated at more than $3 trillion, or&nbsp;<a href="https://www.imf.org/en/Publications/WP/Issues/2019/01/17/Chinas-Digital-Economy-Opportunities-and-Risks-46459" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">a third of national output</a>.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Anchored by internet giants</strong> such as Alibaba and Tencent, the tech sector was not only counterbalancing the decline in older industries such as steel and aluminum but was also largely debt free.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘So the bigger the digital economy,</strong> the greater China’s capacity to manage mounting debts in the old economy and keep growth alive.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘China’s tech revolution</strong> was made possible by two of the forces that were expected to slow the economy.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The population may be aging,</strong> but it still provides a vast market in which tech start-ups can blossom.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘And though growth</strong> normally slows when countries attain a middle-class income, in China the new middle class provides the main customers for new mobile internet services.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘No other country</strong> has this combination.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div>

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<div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="20" style="height:20px; font-size:0">&nbsp;</td></tr><tr><td style="vertical-align:top"><table cellspacing="0" cellpadding="0" width="100%"><tbody><tr><td style="padding-left:3.5%" a=""><a href="" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank" rel="noopener noreferrer" title="CHINADebate"><img width="100%" src="https://cdn.prod.website-files.com/5c864c33af62620dca1373ac/5d86577f82aa6e55afacb4ea_cd%20long-fit.png" alt="CHINADebate" style="width: 110px;"></a></td><td align="right" style="padding-right:3.5%"><a href="" target="_blank" rel="noopener noreferrer" style="color:#001544; font-size:13px; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;"></a></td></tr></tbody></table></td></tr><tr><td height="30" style="height:30px; font-size:0">&nbsp;</td></tr><tr><td style="text-align:center; line-height:1"><span style="font-size: 42px; font-family: gorditamedium, sans-serif; color:#0970b3; letter-spacing: -1px; line-height: 1;">China Macro Reporter</span></td></tr><tr><td style="text-align:center; line-height:1.5; padding-bottom:30px; padding-top:10px;color:#001544; font-size:0.8125em; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;"><span style="color:#001544; font-size:13px; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;">by Malcolm Riddell<span style="margin:0 6px">·</span>Jan 22, 2020</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:20px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">Opening Statement</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/98Uipc?track_p_id=c2SFFACZSFcbf6QWRQs_RRU" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/A34-JXbCfNBw6jMh3VQmQEi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/98Uipc?track_p_id=9OaOVGNo5N6QWRQs_tdU4hJ" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">'We won't be burying China in blueberries.'</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h1 style="display: inline-block;font-size: 1.35em;margin-top: 0em;margin-bottom: 0em;margin-left: 0;margin-right: 0;line-height: 1.35em;font-weight: normal;font-family: gorditamedium, sans-serif;color: #001544;letter-spacing: -0.1px;"><strong style="font-weight: bold">Greetings!</strong></h1><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Discloser: </strong>I am skeptical about most everything (okay, everything) Peter Navarro says about China, trade policy...well, anything.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">But he's Assistant to the President,</strong> and Director of Trade and Manufacturing Policy, so right or wrong, his views are important to understanding White House policies.</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">In the op-ed</strong> that leads today's issue, Dr. Navarro explains why President Trump's tariffs help, not hinder, the U.S. economy.</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">I leave it you</strong> to determine whether or not he's right.&nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">That said, I suggest</strong> you do as I did and check the stories behind the examples he gives to bolster his argument.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Following Dr. Narvarro's od-ed,</strong> we get the first of a double-dose of <strong style="font-weight: bold">Bill Reinsch</strong> of CSIC, who unlike Dr. Navarro, I am never skeptical of, even when I disagree.&nbsp;And, likewise <strong style="font-weight: bold">Gary Hufbaurer </strong>of the Peterson Institute and the ever-insightful and inimitable, <strong style="font-weight: bold">Michael Pettis.</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Ken Jarrett of the Albright Stonebridge Group</strong> sent a terrific analysis refuting points I made in the last issue about 'unequal treaties.'</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">I have to chalk up</strong> our differences up to his having gotten his education in East Asian studies at Yale.</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">My thanks</strong> to Ken!</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Have a comment</strong> on something posted or anything about China? Send it to me.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">I can't publish them all,</strong> but I appreciate having the opportunity to exchange ideas with you.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">As always,</strong> please forward the <strong style="font-weight: bold">China Macro Reporter</strong> to your friends and colleagues.</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Best,</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Malcolm</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:7px; border-left:0px solid #c80000; text-align:center; font-size: 1.5em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">1. Of tariffs &amp; trade deficits</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">Peter Navarro on Trump's Tariffs</span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/7rIMUa?track_p_id=4eY219BXXRu_jfmt1aYpppo" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/K9fKxwrt-0GqvuYSovNp30i__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/7rIMUa?track_p_id=09BXXRu_IbARHQxfdZECUcN" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Give Trump’s Tariffs a Fair Test</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Wall Street Journal</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Peter Navarro</strong> | Assistant to the President, and Director of Trade and Manufacturing Policy</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘Though the current economy is among the strongest of the past 50 years, critics of President Trump’s transformational trade policies continue to insist that the tariffs are hindering rather than helping the boom.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Though the current economy</strong> is among the strongest of the past 50 years, critics of President Trump’s transformational trade policies continue to insist that the tariffs are hindering rather than helping the boom.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Citing forecasts</strong> like the latest from the Federal Open Market Committee, these critics have tarred the Trump tariffs as price inflators, job killers and growth destroyers.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Yet with each new tariff</strong>—on dishwashers, solar panels, aluminum, steel and more than $300 billion of Chinese imports—the economy remains robust, wages continue to rise, and inflation stays muted.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Why have the gloom-and-doom forecasters</strong> been so wrong? The errors come from flaws in traditional economic models.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Using a better set of assumptions</strong> to assess the economy can explain why tariffs have spurred growth, not hampered it.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Antitariff analysts</strong> typically rely on static “partial equilibrium” models that predict how short-run price hikes from tariffs might ripple through a small number of product markets.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘While a tariff on steel</strong> might boost employment in that industry, for example, the price of steel would rise for car makers downstream, which would then suffer lower production and fewer jobs.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Each tariff</strong> shrinks total employment, depresses wages, and increases inflation—or at least that’s how these forecasts typically go.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘What is sorely missing </strong>from these forecasts is a “general equilibrium” analysis of tariffs, which would assess the whole economy, with a concomitant “dynamic scoring” of their effects, to account for the new investment tariffs induce.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Take the steel industry. </strong><a href="https://quotes.wsj.com/X" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">Steel</a>&nbsp;is spending more than $2 billion to upgrade its plants, such as its Gary Works in Indiana and Mon Valley Works in Pennsylvania. Nucor Corp. has committed billions to facilities from Frostproof, Fla., and Sedalia, Mo., to Marion, Ohio, and Brandenburg, Ky.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Over time this tariff-induced investment,</strong> along with lower taxes and sensible deregulation, will boost growth and job creation.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Higher domestic production</strong> will also help offset any price hikes from the tariffs—steel is cheaper now than when the current tariff was imposed.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Here’s an equally important consideration,</strong> this one regarding strategy: President Trump’s imposition of actual tariffs has made the threat of tariffs more credible, and a variety of Trump tariff threats have borne robust results.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘These include</strong> the successful renegotiation of two of the worst trade deals in U.S. history, the North American Free Trade Agreement and the deal struck with South Korea in 2007.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The administration</strong> also forged a new pact with Japan that will boost American electronics along with farmers and ranchers.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The president’s threat of auto tariffs</strong> has likewise drawn billions of dollars of new foreign direct investment from the likes of’ Toyota,&nbsp;<a href="https://quotes.wsj.com/XE/XETR/VOW" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">Volkswagen</a> and&nbsp;<a href="https://quotes.wsj.com/DMLRY" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">Mercedes-Benz</a>,&nbsp;and at home, <a href="https://quotes.wsj.com/FCAU" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">Fiat Chrysler</a>,&nbsp;<a href="https://quotes.wsj.com/F" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">Ford</a>&nbsp;and&nbsp;<a href="https://quotes.wsj.com/GM" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">General Motors</a>&nbsp;are also spending on new facilities.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Combined with job repatriation</strong> from the U.S.-Mexico-Canada Agreement, these investments will boost the fortunes of American auto workers for decades to come.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In addition</strong> to missing the upside of supporting American industries, critics overlook the ways the U.S. has suffered under open trade.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The national-security externalities</strong> associated with Trump trade policy may be even more consequential.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          USMCA          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/8iewwi?track_p_id=09HCukw_4LVCjWNF5W53hen" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/VcdAHHrWxK2Oai7z2r1MjUi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/8iewwi?track_p_id=1y9HCukw_riaS13mZD1Pm4j" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Trade Deficit Down? Read the Fine Print&nbsp;</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Center for International &amp; Strategic Studies (CSIS)</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Bill Reinsch</strong> | CSIS</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><br></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">&nbsp;‘The news of lower deficits is not as good as it sounds,&nbsp;‘The fine print shows a more complicated picture.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The news of lower deficits</strong> is not as good as it sounds.'&nbsp;</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The first 11 months</strong> show a slight decline in the overall goods and services deficit of $3.9 billion, or about 0.7 percent, compared to 2018.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The fine print</strong> shows a more complicated picture.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘First, the main reason</strong> the deficit has declined is due to changes in oil trade.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Thanks to the shale oil boom,</strong> the United States has now become a net exporter of oil.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘That, along with fairly stable prices,</strong> has meant that our trade deficit in petroleum declined to $13.1 billion through November - more than $35 billion less than it was during the same period in 2018.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘This is still good news,</strong> both for the overall trade deficit and for the goal of energy independence.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘But it hides the fact</strong> that the non-petroleum trade deficit, which is mostly manufacturing, was up almost $20 billion through November compared to the same period in 2018.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘This leaves open the possibility</strong> that the full-year deficit in non-petroleum goods will be the biggest ever, ahead of 2018’s record.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Second,</strong> the other reason the deficit is down is fewer imports: U.S. imports in November 2019 (the most recent data available) were $15 billion less year-over-year and $20 billion less than the amount imported in October 2019.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The president and Peter Navarro,</strong> the White House trade adviser, will say is proof his tariffs are working.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Maybe so, but most economists</strong> would say it is more likely a sign of declining demand, which hints at a looming recession.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Of course, as the old joke says,</strong> economists have predicted nine of the last five recessions.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘There is also</strong> the nasty habit of data cherry-picking.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Yes, it appears</strong> the 2019 trade deficit will be smaller than that of 2018.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘But even after 11 months,</strong> it is more than $60 billion higher than it was in all of 2016, President Obama’s last full year in office.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘So, despite the president’s obsession</strong> with outdoing Obama on everything, trade is one area where at least one thing has gotten worse rather than better even by President Trump’s own way of measuring.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The fine print</strong> will also loom over the agreements that have been completed. In the Trump administration, all trade agreements are, by definition, the greatest ever, but a look at the details often leads to a different conclusion.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In the United States-Mexico Canada Agreement</strong>, for example, an examination of the text will demonstrate, on the one hand, how much it is like the Transpacific Partnership, and on the other, the relatively modest impact many of the changes will have, particularly with respect to market access.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘By most accounts,</strong> it is still a net positive agreement, but not the big winner the president claims.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘We should also</strong> see shortly whether the same is true of the China phase one agreement [not signed at the time of writing].’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;"> 3. more on the trade deal</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          Letter to the Editor          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/4j8jWS?track_p_id=6RQ%40W5F6PX5OY_oUb%40iOUFw" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/Cv0NrUdeEarRhQDpcGoxt0i__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/4j8jWS?track_p_id=8DEm5F1qt6PX5OY_qleSI32" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Not an 'Unequal Treaty'</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Ken Jarrett</strong> | Albright Stonebridge Group</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">&nbsp;&nbsp;</strong></p><h2 style="display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">“The agreement will seem to be "unbalanced" if looked through the lens of who gave more. China has to give more because the US economy is already quite open and open to all.”&nbsp;</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Ken Jarrett of the Albright Stonebridge Group</strong> in Shanghai sent a great analysis – and a friendly refutation – of my last post about why Chinese view the trade deal &nbsp;as an ‘unequal treaty,’ and why that’s important. Thanks, Ken!</p><p style="text-align: center;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">________________________________</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“Dear Malcolm,”</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“Here's an alternative</strong> view on this question of ‘unequal treaties.’”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“I agree entirely</strong> that most Chinese are painfully aware of this history and it can easily come to the surface at certain times.”&nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“But I don't believe</strong> that's particularly relevant to this kind of trade negotiation and that trying to score the agreement in that way is the wrong approach.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“This is not to say</strong> that China didn't have objectives from the talks.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“They have some familiar asks</strong> of the US (market economy status, liberalized export controls), but most of these are different from the kind of market access or national treatment requests of the US.”</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“Thus, by its very nature,</strong> the agreement will seem to be "unbalanced" if looked through the lens of who gave more.”</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“China has to give</strong> more because the US economy is already quite open and open to all.”&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“The unequal treaty theme</strong> was strong when the US was pushing China to change its domestic laws to conform to the agreement.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“That got people stirred up</strong> and the Chinese government dug in its heels on that one and prevailed.”&nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“The new agreement</strong> has much softer language on that point.”</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“But in a sense,</strong> China went into this negotiation looking to see how little it would have to give, not how much they could get from the US.”&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“In fact,</strong> you could even turn the "unequal" theme on its head and say that if there is any inequality, it's in the market access areas when China still lags behind the West.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“Moreover,</strong> they still have a ways to go on IPR protection on the like.”&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“Yes, Xi Jinping</strong> does have to be mindful of how the agreement plays back at home and the Chinese govt is sensitive on this point. But they came out fine.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“As many have observed,</strong> China held its ground on SOEs, subsidies and industrial plans.”</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“Where they gave</strong> - IPR and financial services, for example -- these were already underway and are steps China needs to make.”&nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“As for the long list</strong> of agricultural market openings, or the purchase list, this was on the table two years ago.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">“Thus, if there is any risk of Xi being</strong> viewed by the Chinese public as having been subjected to a new national humiliation (which I don't think is happening), it would be largely because the Chinese govt introduced that theme during the negotiations and haven't found a way to shed that notion.”</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Cheers and kudos</strong> on your excellent newsletter,</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Ken</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          'Clint Eastwood Rides Again'          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/89FlWC?track_p_id=cgcRA2YIZBvt37H1eGc_5Hw" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/VcdAHHrWxK2Oai7z2r1MjUi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/89FlWC?track_p_id=8w6eUB5JU7H1eGc_YV4Uz3K" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Trade Deal: The Good, the Bad, and the Ugly</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Center for International &amp; Strategic Studies (CSIS)</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Bill Reinsch</strong> | CSIS</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘Clearly, we won't be burying China in blueberries next year, but the opportunity to do so is welcome through these small signs of China's willingness to open its markets.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In the good category</strong> are some elements of the China Phase One agreement.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘While much of the public discussion</strong> has focused on China's agriculture purchase commitments, more important for the long term will be the many market-opening regulatory commitments China made that will oblige them to accept a range of U.S. products from avocados to barley to blueberries going forward.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Clearly,</strong> we won't be burying China in blueberries next year, but the opportunity to do so is welcome through these small signs of China's willingness to open its markets.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In the possibly good category</strong> are China's commitments on intellectual property and technology transfer.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘They're good on paper,</strong> but we've seen them before—in the case of tech transfer, as long ago as 2001 when China joined the World Trade Organization.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘This time around</strong> they're more specific, and the occasional deadline has been added, which apparently is China's way of saying we broke our word in the past, but this time we mean it. We'll see.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">'If they do,</strong> these are definitely in the good category.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In the bad category</strong> are the many things missing from the agreement, most notably any references to subsidies, state-owned enterprises, or industrial policy.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘These are</strong> the core structural issues where the United States has demanded Chinese reform.’’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘They have been saved for phase two,</strong> but I think it is very unlikely any of them will be addressed in any meaningful way.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘There may well be a phase two,</strong> although analysts are beginning to doubt that, but these are core political issues for China.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Our demands may be good economics,</strong> but concessions in these areas will inevitably undermine Party control, which makes them non-starters for Xi Jinping.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In the ugly category</strong> are the agreement's enforcement provisions.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Their intent</strong> is clearly based on a “sovereignty is everything” and “might makes right” philosophy.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Ambassador Lighthizer</strong> has been honest in saying he wants structures in which the United States can get its way because it is bigger and stronger than the other parties.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘So, his intent</strong> is clearly to undermine traditional dispute settlement and rule of law approaches because he believes doing so will work to our advantage.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘For those</strong> who believe in the rule of law and in multilateralism, this is a major attack.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width: 600px; width: 100%; height: 30px; margin: 0 auto; padding: 0px; background-color: #001544; text-align: center;"><tbody><tr><td width="40" height="auto" style="border-bottom: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td><td rowspan="2" height="40px"><span style="font-family: Georgia, serif; padding: 8px 40px 8px 0px; font-size: 1.2em; font-weight: 900; color: #ffffff; line-height: 1.25em; letter-spacing: -0.1px; font-style: italic; text-transform: none;">          From Free to Managed Trade          </span></td></tr><tr><td width="40" height="auto" style="border-top: 7px solid #c80000;"><p style="font-size: 0px;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/67DrlY?track_p_id=dq13kXiwtsDAsx6oD7eA_f3" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/TiISon2f36FD5_ms-2WONki__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/67DrlY?track_p_id=cUxdZNYLxD61b6oD7eA_w5C" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Managed trade: Centerpiece of US-China phase one deal</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Peterson Institute for International Economics (PIIE)</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Gary Hufbauer</strong> | PIIE</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘The new US-China agreement is complete immersion into managed trade.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The only way for China</strong> to reach its commitments to buy an additional $200 billion of US goods and services during 2020 and 2021 is to resort to Soviet-style managed trade.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In other words,</strong> China promises to import a certain dollar or physical volumes of detailed goods and services, regardless of market prices or demand conditions.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Instead of</strong> principally relying on explicit reductions in Chinese tariff and nontariff barriers to boost US exports—only a few such reductions can be found in the agreement—quantitative targets are inscribed in the text.’</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The Chinese commitment</strong> represents a worrisome and radical change in US policy and conveys a troubling message to the rest of the world.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The US Trade Representative</strong> dipped its toe into managed trade with the US-Mexico-Canada Agreement, by setting complicated “rules of origin” and quotas governing the content of imported automobiles getting trade preferences.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The new US-China agreement</strong> is complete immersion into managed trade.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Price signals are out,</strong> quantitative commitments are in.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Other countries that export to China</strong>—like Brazil, which has filled the breach on soybeans, and Canada, which is a potential supplier of crude oil—will ask whether new commitments to purchase US goods and services come at their expense.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In the immediate aftermath,</strong> other countries may complain; over a longer period, they are likely to emulate.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The erosion of a market system</strong> of international trade is sure to cause distortions, lots of favoritism, and inevitable corruption.’</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">3. why an 'a-share premium’</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/6gd3C4?track_p_id=9m3OnMlLhT85GBWI_y5OKRd" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/zxbyrGBKPhFFZLzMYqfYnUi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/6gd3C4?track_p_id=8nOSAKLvW85GBWI_qpGgWby" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Fundamentals simply do not matter in China’s stock markets</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Financial Times</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Michael Pettis</strong> | Peking University</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘In fact the Chinese stock market is really a Keynesian beauty contest: “winners” are rewarded not for choosing the best-looking contestants, but rather for their ability to figure out the consensus.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘It is tempting</strong> to try to find meaning in the so-called “A-share premium”.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘This is the persistent valuation gap</strong> between the shares of Chinese companies that trade in Shanghai or Shenzhen (known as A-shares) and the shares of the same companies that trade in Hong Kong (H shares).’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘For much of 2019</strong> the A-share premium has been roughly 20-30 per cent, meaning that A-shares are 20-30 per cent more expensive than equivalent H shares.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘So why is the same share</strong> worth so much more on the mainland than it is offshore?’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘One theory</strong> is that it reflects differing views on political risk, with mainlanders less worried than foreigners about the risk of a political “event” disrupting business prospects.'</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Another theory</strong> is that it shows that mainland investors are more optimistic about Chinese growth prospects than offshore investors.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘A third theory</strong> is that it reflects an information asymmetry in which onshore investors have access to a higher quality of information than offshore investors, and so are able to discount future growth prospects at a lower rate.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘But none</strong> of these explanations makes any sense.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘They all assume,</strong> incorrectly, that prices in the Chinese stock market reflect a fundamental “view” about growth prospects, measured as the present value of future expected cash flows. They do not, and never have.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘It has been almost impossible</strong> during the past few decades to find a credible correlation between the performance of the Chinese stock market and any measure of growth prospects or profitability.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In fact the Chinese stock market</strong> is really a Keynesian beauty contest: “winners” are rewarded not for choosing the best-looking contestants, but rather for their ability to figure out the consensus.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Successful investors</strong> are not those who understand the economy, in other words, but rather those who are good at interpreting government signalling, recognising shifts in liquidity and, above all, quickly discerning or even setting off changes in market consensus.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In speculative markets</strong> it is these kinds of “technicals” that matter, not fundamentals.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/sHPAA7e9QwYBz8mODVKF-Dl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div>

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<div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="20" style="height:20px; font-size:0">&nbsp;</td></tr><tr><td style="vertical-align:top"><table cellspacing="0" cellpadding="0" width="100%"><tbody><tr><td style="padding-left:3.5%" a=""><a href="" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank" rel="noopener noreferrer" title="CHINADebate"><img width="100%" src="https://cdn.prod.website-files.com/5c864c33af62620dca1373ac/5d86577f82aa6e55afacb4ea_cd%20long-fit.png" alt="CHINADebate" style="width: 110px;"></a></td><td align="right" style="padding-right:3.5%"><a href="" target="_blank" rel="noopener noreferrer" style="color:#001544; font-size:13px; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;"></a></td></tr></tbody></table></td></tr><tr><td height="30" style="height:30px; font-size:0">&nbsp;</td></tr><tr><td style="text-align:center; line-height:1"><span style="font-size: 42px; font-family: gorditamedium, sans-serif; color:#0970b3; letter-spacing: -1px; line-height: 1;">China Macro Reporter</span></td></tr><tr><td style="text-align:center; line-height:1.5; padding-bottom:30px; padding-top:10px;color:#001544; font-size:0.8125em; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;"><span style="color:#001544; font-size:13px; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;">by Malcolm Riddell<span style="margin:0 6px">·</span>Jan 18, 2020</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:20px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;&gt;why xi must hate trumpt&lt;/span&gt;                  &lt;/td&gt;                  &lt;/tr&gt;                  &lt;/tbody&gt;                  &lt;/table&gt;                  &lt;/div&gt;&lt;div&gt;&lt;table cellspacing=" 0"="" cellpadding="0"></span></td></tr></tbody><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:7px; border-left:0px solid #c80000; text-align:center; font-size: 1.5em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">A Chinese perspective</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/900DVA?track_p_id=bWSkv4Wjjffn6QWRQs_EurE" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/A34-JXbCfNBw6jMh3VQmQEi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/900DVA?track_p_id=06QWRQs_4VSAsWbteE2ysOt" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">How Xi Must Hate Trump</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">My first thought</strong> on reading the text of the Phase One Trade Deal was, wow, the Chinese are going to interpret this as an ‘unequal treaty.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">My second thought</strong> was that Xi must hate Trump.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">The Chinese</strong> have been bad actors in trade.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">And, credit where credit is due,</strong> President Trump has faced them down, regardless of whether you view the trade deal as the greatest ever or a disappointment.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">But I would bet</strong> from the Chinese and Secretary General Xi Jinping’s perspectives the deal is a defeat and a humiliation, echoing the defeat in the First Opium War followed by the first unequal treaty.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">And as Zheng Wang contends,</strong> ‘Never forget national humiliation’ - 勿忘国耻 is China’s national phrase.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">China’s ‘Century of Humiliation’</strong> began with defeat in that Opium War in 1842 and ended in 1949 when Mao Zedong purportedly said, “The Chinese people have stood up.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Rightly</strong> the Chinese Communist Party takes credit for ending that humiliation and, along with it, the unequal treaties.</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Since 1949, until last Wednesday,</strong> China hadn’t had a defeat that forced an unequal treaty on it - and it happened on Xi's watch.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">As Mao’s self-identified heir </strong>Xi no doubt feels unbearable humiliation and resentment.&nbsp;</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Tellingly,</strong> despite Trump’s prodding, Xi refused to sign the deal in person.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">From a realpolitik</strong> point of view, too bad about Xi’s feelings.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">But as the Chinese</strong> have amply demonstrated, they know how to hold a grudge.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">If China can hold a grudge</strong> against the West and Japan for going on 200 years, how long will Xi hold his grudge against Trump and, in turn, the United States for forcing him into an unequal treaty?</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">And how much</strong> will that spur China’s drive to confront the United States, long after Trump and Xi have left office?</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">I've devoted this issue</strong> to the Chinese perspective of the trade deal.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">I not spinning </strong>the Chinese perspective out of my head.</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">The feeling</strong> that the U.S. has 'put a gun to China's head' to force an 'unequal treaty' has been expressed in Chinese official and social media at different times throughout the negotiations.</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">And, that perspective</strong> has been missing in most of the analyses I've read over the past few days.</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">In the long run,</strong> how the Chinese feel - and how they act on those feelings - could be the most important outcomes of the trade deal.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;            </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:7px; border-left:0px solid #c80000; text-align:center; font-size: 1.5em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">1. an unequal treaty               </span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/7s6llo?track_p_id=cd1sdaqrVZadf5l9PDy_oa3" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/mSKpZDA7T21BMMaFwefwGEi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/7s6llo?track_p_id=2ue5l9PDy_BP3v6lceB25Xg" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Pig of a deal?</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Sinocism</strong></h3><h3 style="text-align: left;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Bill Bishop</strong> | Sinocism</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">'Overall it does look a bit like a pig of a deal.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Even though</strong> I expected it, when I read the text of the trade deal, I was still shocked at how one-sided it was.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Thanks to Bill Bishop</strong> of the ever-excellent <a href="https://sinocism.com/" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">Sinocism</strong></a> we can see quantitatively just how one-sided.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">BTW,</strong> if you are not a <a href="https://sinocism.com/" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><em style="font-style: italic"><strong style="font-weight: bold">Sinocism</strong></em></a> subscriber, you should be. Evan Osnos of The New Yorker calls it "The presidential daily brief for China hands."</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Here’s</strong> the <a href="https://sinocism.com/" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">link</a> to subscribe.</li></ul><p style="text-align: center;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">___________________________</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The phase one trade deal</strong> speculation is over, but the criticism is just beginning.’</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘On Monday Taoran Notes,</strong> written by someone I hear travels with Liu He during his trade talks with the US, published for the first time in over two months. The post, a defense of the deal clearly targeting domestic criticism.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘He used the phrase</strong> 里外不是人 to say that there would be complaints regardless of what is in the deal.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘里外不是人</strong> comes from the longer 猪八戒照镜子，<em style="font-style: italic">里外不是人, or Zhu Bajie looks in the mirror, neither he or his reflection are human.’</em></li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘From the texts of the deal</strong> (<a href="http://email.substack1.sinocism.com/c/eJw9UctuwyAQ_Bpzq2XwI86Bg9umP9D0jDCsbVQMFqyT-u-LnaYS0iy7o93RjJIIow8bX3xEskYIwmje0DPRvFfsJImJYggAszSWk2XtrVESjXc7j5GJU0ZPba1p36gSKGOqrtVAG903RXMuSk32zUKu2oBTwOEGYfMOiOUT4hKzssvYR3prxJCP_pbKaBBiQg2DXC2majD26DxRjrskcLh_lklGyFjNirT3wP9xml6Ud342SnROi2uQGkT3HItXwDuAE9cJxJdLZ7X4xGRJPNhvk3FSXOEH80UPxHBWsKKgNNlTVLTOaU7fq6pu2YVe2o62Jc2qIq59RKm-aR6N88rEOVd-JoHP0ipv5zwYrcHaRP2rXjCCGw9W8lcknNekZRPgZG9BcwwrEHxEdLiJ2wLcwT1aQITwaO55sFNJK5IkaJ8Cc_wp4RdINajm" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">English</a>,&nbsp;<a href="http://email.substack1.sinocism.com/c/eJw1kMuOwyAMRb-m7IowISVZsKjUzm9EBJwWDY8IyFT5-yHtjGT5WtaRH9foio-Ud7WmUslWME_OqguMxKrZcKmJK9OSEYN2XpF1m70zuroUD46TpxJyXiSXMC6LlQNbNPZjJzTTfBxNj5Yckye9WYfRoMIfzHuKSLx61rqeuuuJf7V4pewtXTGtHqlJgZrYuhFa4oyzJgzg0sQAY_zcQd-DGCR91uCJUwdzADAyAT0FCjch-oHf4T5cYejgJFjZ5lK1-QZaXEzGlXAsIlkF7U3ygWZnLXrf0L_qXAvGx5tqn09NwxZd3SeMevZoVc0bkvox7_1n3VdUEV_FY62YP83DKS47EKSdYFOzMqr_E34BJPp_wA" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">中文</a>) the US looks to have scored some wins at the margin, and some of the language, such as the fact (thanks to an eagle-eyed subscriber) that there are’…</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘105 times</strong> of “China shall”,’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘60 times</strong> of “the Parties shall”,’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘5 times</strong> of “the United States shall”,’ and</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘27 times</strong> of “the United States affirms”,’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">…’could clearly be</strong> construed in China as bowing to US pressure.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In response</strong> we are seeing a very concerted PRC media effort to control the narrative and insist that the deal is balanced and fair and that China did not compromise any core interests.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Zhu Bajie</strong> of course is the character from Journey to the West, also known in some translations as “Pigsy” or “Pig”.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘I do not think</strong> the author of Taoran Notes meant to call this deal a pig, but overall it does look a bit like a pig of a deal.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;            </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/8ynQCO?track_p_id=8vrQdh5uY68iwAQ_24Zu6Uz" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/DEIpRAJcXnuS2xLESbQEBUi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/8ynQCO?track_p_id=6zZjDz568iwAQ_YqXGceVxp" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank"> 勿忘国耻 : The China-U.S. Trade War And The Politics Of National Humiliation&nbsp;</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">New York Times &amp; National Public Radio</strong></h3><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><br></h3><h2 style="display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">"Never forget national humiliation" is China's national phrase.</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><a href="https://www.nytimes.com/2019/03/27/us/politics/china-opium-wars-trade-talks.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">NYT.</strong></a><strong style="font-weight: bold"> “Every schoolchild in China</strong> and every educated Chinese person knows about the ‘century of humiliation,’” said Stephen R. Platt of the University of Massachusetts.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“There’s a lingering memory</strong> of that history from the 19th century that goes a long way to explain the desire in China for a global trading order that works more on China’s terms.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><a href="https://www.npr.org/2019/06/25/735274808/analysis-the-politics-of-national-humiliation-in-the-trump-xi-meeting" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">NPR.</strong></a><strong style="font-weight: bold"> ‘Zheng Wang</strong>, a scholar of China's politics and foreign relations, zeroes in on four Chinese characters that are etched into national sculptures and monuments and painted on walls all over the country.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The four characters,&nbsp;勿忘国耻</strong> - <em style="font-style: italic">wu wang guo chi - </em>can be literally translated as "Never forget national humiliation."</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Zheng </strong>calls it China's national phrase.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;            </td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/HMUxySGiCto4qjFnIfUoPTl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/7Zs2fA?track_p_id=2bf529z6k_CsS2AIw4kcZE5" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/3QKIJ28TXRxlm_PNLipujEi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/7Zs2fA?track_p_id=43Keb529z6k_RPvMCGFWdb2" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">19th-Century ‘Humiliation’ Haunts China-U.S. Trade Talks&nbsp;</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">New York Times &amp; Foreign Affairs</strong></h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">“The Communist Party was created on a narrative of standing up to, and ending, unequal treaties.”</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><a href="https://www.nytimes.com/2019/03/27/us/politics/china-opium-wars-trade-talks.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">NYT.</strong></a><strong style="font-weight: bold"> ‘When President Trump’s trade team</strong> presented Chinese officials with a list of bold economic demands in Beijing last May, one of China’s state-controlled news outlets, Global Times, panned the request and blared a&nbsp;<a href="https://mil.sina.cn/zgjq/2018-05-06/detail-ihacuuvt8294836.d.html?from=wap" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">curious headline</a>:<strong style="font-weight: bold"> “Is it now 1840?”</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In 1839, the big trade war</strong> that gripped the world was between Britain and China’s Qing dynasty.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Britain</strong> was buying large quantities of Chinese silk and tea, but China was buying little in return, creating an uncomfortably large trade deficit.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘So Britain turned to smuggling Indian opium</strong>, a product that proved hard to resist, into China, and its resistance turned a trade war into a real one.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The three-year war ended</strong> with the Treaty of Nanking, which gave Britain control of Hong Kong and opened several new trade ports in China and allowed British merchants to come to China and trade freely with no restrictions.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘That was just</strong> the beginning.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘By the 1850s,</strong> the United States, Russia and France signed treaties with China with the same terms, allowing foreigners to sell goods with low tariffs and giving them privileged status in mainland China.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The Communist Party</strong> was founded nearly a century ago on a promise of putting a stop to humiliation at the hands of foreigners.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“The Communist Party</strong> was created on a narrative of standing up to, and ending, unequal treaties,” said Michael Pillsbury of the Hudson Institute.’&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><a href="https://www.foreignaffairs.com/reviews/review-essay/2017-06-13/history-chinese-characteristics" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">Foreign Affairs.</strong></a><strong style="font-weight: bold"> ‘On November 15, 2012,</strong> the day he became general secretary of the Chinese Communist Party,&nbsp;<a href="https://www.foreignaffairs.com/articles/china/2014-10-20/chinas-imperial-president" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">Xi Jinping</a>&nbsp;stood onstage at the Great Hall of the People, in Beijing, to reflect back on his country’s 5,000 years of history.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘After citing</strong> China’s “indelible contribution” to world civilization, Xi called for “the&nbsp;<a href="https://www.foreignaffairs.com/articles/china/2015-04-20/what-it-means-be-chinese" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">great revival of the Chinese nation</a>.”</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘And he acknowledged</strong> that others had “failed one time after another” to realize that goal.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Implicit in Xi’s remarks</strong> was a promise: unlike his predecessors, he would not fall short.’&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;            </td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/I6uk2_17xcTDC6MwdBi80Dl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/8sk4RM?track_p_id=05hVv7W_X4XQRzXAl6fsqg5" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/fpGU-wSZv6h37ihY1x6e3Ui__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/8sk4RM?track_p_id=2kB5hVv7W_RJxEKrKRB5I61" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Why Xi Distanced Himself from the Trade Deal</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">South China Morning Post</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Shirley Yu | </strong>Harvard Kennedy School</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">&nbsp;</strong></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘By delegating the inking of the deal to his chief trade negotiator, Liu He, Xi frees himself from any association with China’s “century of humiliation."</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Since December 13,</strong> when the trade deal was announced, US President Donald Trump has showered the world with&nbsp;<a href="https://www.scmp.com/economy/china-economy/article/3044741/trade-war-chinese-put-back-visit-sign-truce-after-donald" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">hyped-up promises</a> – that he and Chinese President Xi Jinping&nbsp;<a href="https://www.scmp.com/news/china/article/3043454/donald-trump-says-he-and-xi-jinping-will-sign-us-china-trade-deal" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">would be signing</a> the deal themselves; that he would fly to Beijing to start negotiations on phase two.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In the end,</strong> Trump could neither secure Xi at the signing table nor wrangle himself an invite to Beijing.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘For Xi,</strong> there is nothing glorious about the trade deal; he would prefer that the Chinese public forget to ask about it.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘By delegating the inking</strong> of the deal to his chief trade negotiator, Vice-Premier Liu He, Xi frees himself from any association with China’s “<a href="https://www.scmp.com/week-asia/opinion/article/3012679/trumps-biggest-mistake-us-china-trade-war-not-realising-chinese?utm_medium=Social&amp;utm_source=Facebook&amp;fbclid=IwAR00XSj3s3tBvpA2Rsjn4OCtz9mB4QxxLK21nWd1x9dAqDqwErvcVJev-B8#Echobox=1559633912" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">century of humiliation</a>”, when the country was forced to sign treaties with foreign powers.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘He must remain</strong> the invincible dream builder, never the surrenderer.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Liu’s signature</strong> on the deal allows for several possibilities – from suspension or revocation of the deal to escalation of the trade war on Xi’s orders.’</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘As the Chinese military classic</strong>&nbsp;<a href="https://www.scmp.com/culture/books/article/2149936/chinese-military-classic-art-war-gets-revealing-new-translation-book" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><em style="font-style: italic">The Art of War</em></a><em style="font-style: italic"></em>says: “All warfare is based on deception.”</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Thus,</strong> the US-China&nbsp;<a href="https://www.scmp.com/economy/china-economy/article/3042069/trade-war-breakthrough-us-and-china-reach-phase-one-deal" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">phase one trade deal</a> will prove to be just a cosmetic act by Beijing.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘China is feigning</strong> trade appeasement to give itself time for structural economic adjustments – its goal is to seize global economic primacy.'</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;            </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div>

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<div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="20" style="height:20px; font-size:0">&nbsp;</td></tr><tr><td style="vertical-align:top"><table cellspacing="0" cellpadding="0" width="100%"><tbody><tr><td style="padding-left:3.5%" a=""><a href="" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank" rel="noopener noreferrer" title="CHINADebate"><img width="100%" src="https://cdn.prod.website-files.com/5c864c33af62620dca1373ac/5d86577f82aa6e55afacb4ea_cd%20long-fit.png" alt="CHINADebate" style="width: 110px;"></a></td><td align="right" style="padding-right:3.5%"><a href="" target="_blank" rel="noopener noreferrer" style="color:#001544; font-size:13px; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;"></a></td></tr></tbody></table></td></tr><tr><td height="30" style="height:30px; font-size:0">&nbsp;</td></tr><tr><td style="text-align:center; line-height:1"><span style="font-size: 42px; font-family: gorditamedium, sans-serif; color:#0970b3; letter-spacing: -1px; line-height: 1;">China Macro Reporter</span></td></tr><tr><td style="text-align:center; line-height:1.5; padding-bottom:30px; padding-top:10px;color:#001544; font-size:0.8125em; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;"><span style="color:#001544; font-size:13px; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;">by Malcolm Riddell<span style="margin:0 6px">·</span>Jan 16, 2020</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:20px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">Opening Statement</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/6T84a8?track_p_id=641zQkA8qfkL8_qVslqSEwA" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/uhp7CvL-kYuJYdwsZTPG2Ui__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/6T84a8?track_p_id=4MTta8qfkL8_p3c3jNBGgYG" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">One Cheer for Trump's Trade Deal</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h1 style="display: inline-block;font-size: 1.35em;margin-top: 0em;margin-bottom: 0em;margin-left: 0;margin-right: 0;line-height: 1.35em;font-weight: normal;font-family: gorditamedium, sans-serif;color: #001544;letter-spacing: -0.1px;"><strong style="font-weight: bold">Greetings!</strong></h1><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘While Mr. Trump</strong> and his team celebrate their “victory” over China, don’t expect much fanfare among anyone else,’ wrote Eswar Prasad of Cornell &amp; Brookings in his NYT op-ed, <a href="https://www.nytimes.com/2020/01/15/opinion/china-trade-deal-trump.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">‘Trump Gets His Trade Deal, China Gets the Win.’</a></p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">And the first comments</strong> on the deal bear this out – they’re pretty negative.</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">More will be coming,</strong> and I’ve keep an eye open for some that are more laudatory.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Beyond the trade deal,</strong> a reader wrote in response to <a href="https://www.project-syndicate.org/commentary/us-iran-conflict-china-benefits-by-minxin-pei-2020-01" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">‘Trump’s Gift to China’</a> in the last issue.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">"Minxin Pei’s comment</strong> is probably the stupidest I’ve heard in the last three weeks, and that’s some stiff competition.”&nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">While not so direct, </strong>Jude Blanchette and Bonnie Glasser of the Center for Strategic &amp; International Studies (CSIS) in <a href="https://www.csis.org/analysis/beijing-wants-preserve-status-quo-iran" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">'Beijing Wants to Preserve the Status Quo in Iran'</a> contend that China believes Middle East peace is much more in its interest than any advantage it could reap from a distracted America that as Pei suggests.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Finally a sobering analysis</strong> from Oriana Mastro of Georgetown &amp; AEI:</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Tsai Ing-wen</strong> won a second term as president of Taiwan in elections on Saturday.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Tsai has explicitly rejected</strong> China’s formulation of “one country, two systems,” and her re-election will likely convince Chinese leaders that peaceful reunification is a pipe dream. They would be right.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Tsai’s victory</strong> will darken Taiwan’s future as the Chinese Communist Party comes to realize that the only way Taiwan will ever reunify with mainland China is at the end of a gun.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><br></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Let me know</strong> what you think.</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">And, as always,</strong> please forward the China Macro Reporter to your friends and colleagues.&nbsp;</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Best,</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Malcolm</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:7px; border-left:0px solid #c80000; text-align:center; font-size: 1.5em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">1. Phase one trade deal: first reactions</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/6l9bLE?track_p_id=dHE5liKmZtVwCF7WmTJW_qZ" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/K9fKxwrt-0GqvuYSovNp30i__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/6l9bLE?track_p_id=cBnMLKrNuwWwP7WmTJW_xd1" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">U.S.-China Trade Détente, but a More Dangerous World</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Wall Street Journal</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Nathaniel Taplin</strong> | WSJ</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">&nbsp;</strong></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">&nbsp;‘The most lasting impact is a marked, rapid deterioration in Sino-U.S. relations overall.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Two years later</strong> the U.S.-China trade battle royale of 2018 and 2019 is winding down.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘A few of its purported aims</strong> were accomplished.&nbsp;<a href="https://www.wsj.com/articles/how-the-u-s-and-china-settled-on-a-trade-deal-neither-wanted-11578931635?mod=article_inline" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">Many weren’t</a>.'</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The most lasting impact</strong> is a marked, rapid deterioration in Sino-U.S. relations overall.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Overt trade hostilities </strong>might remain on hold for now as the U.S. election season approaches, but technological<a href="https://www.wsj.com/articles/tech-tensions-simmer-in-washington-as-u-s-china-near-trade-truce-11579041159?mod=article_inline" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">, security and ideological competition</a>, always undercurrents to Sino-U.S. relations, have been supercharged by the bitter conflict.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Investors</strong> will be dealing with the consequences for years to come as economic “decoupling” raises costs, cooperation on issues like carbon emissions becomes harder, the risk of military conflict in Asia rises and technology buyers increasingly need to choose between competing U.S. and Chinese systems and standards.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘One thing the trade conflict</strong> has noticeably failed to accomplish is any serious commitment from Beijing to abandon its own state-led industrial policy.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Instead, China’s leaders</strong> have received the message that the U.S. doesn’t welcome its technological rise—and&nbsp;<a href="https://www.wsj.com/articles/china-will-live-or-die-by-its-digital-economy-11569203477?mod=article_inline" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">redoubled their determination to promote domestic champions</a>.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Deteriorating relations</strong> have spilled over into the security realm as well.'</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">'Most obviously</strong> is with the Trump Administration’s designation of China as a strategic competitor and statements by top U.S. officials warning of a “clash of civilizations.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Tariffs now in place</strong> look unlikely to be scaled back substantially.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘That means economic decoupling</strong> will continue—just as China’s military is nearing the point where it could&nbsp;<a href="https://www.wsj.com/articles/defending-against-a-chinese-navy-of-500-ships-1484848417?mod=article_inline" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">plausibly prevail in conflicts near China’s periphery</a>.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The risk</strong> of mistakes and miscalculations is rising at the same time economic interests in avoiding confrontation are disengaging.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Investors are used to thinking</strong> of the Middle East as the real hot spot for political risk.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Over the next decade,</strong> it seems increasingly likely to be Asia.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/5sA5wG?track_p_id=06Sibq2_NLHH46Xk3z3xxDX" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/zxbyrGBKPhFFZLzMYqfYnUi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/5sA5wG?track_p_id=atyLzmkAngz6Sibq2_Mcj%40N" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Truce in the US-China trade war is only partial</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Financial Times</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Editorial Board | </strong>FT</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">&nbsp;</strong></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘The deal brings welcome relief that trade relations may stop getting worse. But that should not delude anyone into thinking that they are good.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘For a self-declared master dealmaker</strong> such as US president Donald Trump, being able to flaunt a trade truce with Beijing may have been the main goal of his long and damaging trade war.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘For everyone else,</strong> it amounts to little more than a hope — and a weak one at that — that things will not get worse.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The agreement,</strong> signed in Washington on Wednesday, is billed as “phase one” of a bigger deal.'</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘On its own,</strong> however, it leaves the US-China trade relationship in a much worse state than when Mr Trump took office.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘It leaves average tariff levels</strong> on both sides&nbsp;at around 20 per cent.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Two years ago the average US tariff</strong> on Chinese imports stood at 3 per cent; in the other direction it was 8 per cent.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The deal</strong> brings welcome relief that trade relations may stop getting worse.'&nbsp;</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">'But that should not delude anyone</strong> into thinking that they are good.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘While the deal imposes</strong> on Beijing commitments to improve intellectual property enforcement and lighten pressure for technology transfer, it leaves in place significant damage.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘As a result</strong> of tariff hikes and counter-hikes, the US manufacturing recession is worsening.’’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘China’s growth</strong> has slowed.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Other trade-dependent economies</strong> have been caught in the crossfire.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Beyond the direct economic impact</strong> are the political distortions created by US industry lobbying for compensation and exemptions — as well as by Mr Trump’s statist focus on government-directed purchases of US farm products and industrial machinery.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Nor does the deal eliminate </strong>the uncertainty Mr Trump has created.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The truce</strong> may of course be followed by “phase two” talks that aim to undo more of the damage.'</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Just as likely,</strong> it sets the stage for renewed aggression when one side claims the other has not complied with the agreed terms.’’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The highly one-sided nature</strong> of most of the obligations leaves little confidence that Beijing will change its behaviour to the degree the White House seems to expect.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘And if Mr Trump</strong> really wants to sever the US and China’s entangled supply chains, he may well be content to sit back and let the heightened tariffs do their work.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Beyond what happens next</strong> in the US-China relationship, the big question is whether the truce emboldens Mr Trump to act out his instinctive protectionism elsewhere.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘He seems</strong> in particular to relish the idea of a trade fight with Europe.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/6dmJ0a?track_p_id=6XJTn6q6mEFyw_GIUgXkbrl" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/xg1hlaui5w-J_sk3cM09dki__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/6dmJ0a?track_p_id=c%40Y2X4va1jlX56mEFyw_2K3" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">US-China trade pact merely papers over global faultlines</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Financial Times</strong></h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘A stronger currency and the retention of US tariffs means severe headwinds loom for China’s slowing economy.’&nbsp;</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The signing of a&nbsp;trade armistice</strong> between the US and China&nbsp;on Wednesday&nbsp;marked&nbsp;an opportunity to reflect on the economic damage inflicted over the past 18 months and was a reminder that truces are usually shortlived.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘That should</strong> in theory temper the bullish mood that has driven equity markets into record territory.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘But&nbsp;with Wall Street’s leading equity gauges</strong> hitting intraday peaks&nbsp;on Wednesday, helped by&nbsp;hefty support from global central banks&nbsp;and the rampant hunt for returns, there still appears to be plenty of appetite for risk assets.’&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Global trade faultlines are discernible,</strong> particularly from a&nbsp;White House that is not rolling back the full extent of existing tariffs&nbsp;on $360bn of Chinese products&nbsp;until the agreement of a phase-two deal with China, a prospect only pencilled in to happen after the US elections in November.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Clearly, a US stick hovers over China</strong> should the country not follow through with its promise to buy&nbsp;more American goods and keep&nbsp;its currency on the firmer side of the ledger.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Existing US tariffs</strong> on $120bn of Chinese goods have been halved, but levies of 25 per cent on a separate $250bn of Chinese exports remain.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘That suggests the risk</strong> of&nbsp;renewed escalation between Washington and Beijing should not be dismissed.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘There is also a sense</strong> that Beijing&nbsp;is stuck in a tough place, as the recent appreciation of the renminbi&nbsp;has not facilitated broader tariff relief from the US.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">'A stronger currency and the retention of US tariffs</strong> means severe headwinds loom for China’s slowing economy.’&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/-SJTFNJiDFtroZ2Ij6kO4Dl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">2. getting to phase two</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/4sv8cq?track_p_id=31aC5rxYUg_x4FGeyC3Nm46" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/2P2LxiV-sg54VayqL9X2F0i__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/4sv8cq?track_p_id=7Q6H2HQV5rxYUg_HMvMydBW" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">A Delicate Truce in the U.S.-Chinese Trade War</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Foreign Affairs</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Weijian Shan</strong> | PAG</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘Each country must determine what its real objectives are and prepare to make important concessions.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The Phase I agreement</strong> doesn’t substantially bridge the impasse between the United States and China.’&nbsp;</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘With Phase II</strong><strong style="font-weight: bold">negotiations ahead, </strong>a wide gap still separates the two sides on major issues, and the prospect of serious compromise remains distant.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Neither side</strong> has provided concrete details on what it hopes to achieve in the next round of negotiations.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘But China’s main objectives</strong> are unequivocal.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Beijing wants Washington</strong> to remove all the tariffs.'</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘It wants the United States</strong> to drop its sanctions on Chinese technology firms such as Huawei, and to relax restrictions on Chinese investments in the United States.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The United States</strong> will likely be reluctant to amend policies designed to thwart China’s advances in high technology.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Washington</strong> has also repeatedly criticized the Chinese government’s support for its state-owned enterprises and taken issue with&nbsp;<a href="https://www.cfr.org/backgrounder/made-china-2025-threat-global-trade" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">Made in China 2025</a>, a Chinese plan to increase domestic capacity in technology-driven fields.'</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘But China is unlikely</strong> to abandon its ambition to catch up and compete with the United States in developing and producing new technology.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The ultimate goal of the next stage</strong> of negotiations for both sides should be very clear: to reach an equitable deal that lowers barriers to trade and investment.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In the service of this aim,</strong> each country must determine what its real objectives are and prepare to make important concessions.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The United States</strong> must decide whether what it really wants is access to the Chinese market and better prices for U.S. consumers, or whether it simply wants to contain China’s rise at all costs.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Washington</strong> cannot have it both ways.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The former aim</strong> could ultimately lead to a trade deal, but the latter never will.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘For its part, Beijing</strong> must finally decide what to do with the most pernicious holdover from its planned economy days: China’s inefficient state-owned sector.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Business leaders</strong> generally believe that this sector will be the complicating factor in Phase II negotiations. But it need not be.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘China’s own stated goal</strong> is to let the market be the decisive force in the allocation of resources in the country. China should continue to restructure, reform, downsize, and privatize the state sector in accordance with this goal, not just because doing so may entice the United States to stop the trade war but because such reforms will be good for China.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;"> 3. Why china wants middle east peace</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/4wrNBY?track_p_id=5kFG3o7G9XtW_jUzutn3rsw" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/VcdAHHrWxK2Oai7z2r1MjUi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/4wrNBY?track_p_id=drPj1DbfFtzb6e7G9XtW_Nd" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Beijing Wants to Preserve the Status Quo in Iran</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Center for Strategic &amp; International Studies (CSIS)</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Jude Blanchette &amp; Bonnie Glaser | </strong>CSIS</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">&nbsp;</strong></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">"Minxin Pei’s comment is probably the stupidest I’ve heard in the last three weeks, and that’s some stiff competition."&nbsp;</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">In </strong><a href="https://www.project-syndicate.org/commentary/us-iran-conflict-china-benefits-by-minxin-pei-2020-01" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">&nbsp;‘Trump’s Gift to China,’</strong></a> highlighted in the last issue, Minxin Pei wrote, '<em style="font-style: italic">escalating tensions with Iran will distract the US from its competition with China, just as the 9/11 attacks did a generation ago.'</em></p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">"Minxin Pei’s comment</strong> is probably the stupidest I’ve heard in the last three weeks, and that’s some stiff competition," one astute and regular reader wrote me.&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Here are Jude &amp; Bonnie&nbsp;</strong>on why that reader may well be right.</p><p style="text-align: center;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">________________________</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Some have posited</strong> that Beijing welcomes a U.S. war with Iran because it would distract the United States from its focus on strategic competition with China.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In the wake of the 9/11 attacks </strong>and the subsequent dual invasions of Afghanistan and Iraq, Beijing did indeed see an opening for what then-Chinese leader Jiang Zemin called a window of “strategic opportunity.”&nbsp;</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘But 2020 is not 2001,</strong> and the expansion of China’s global interests and investments mean that instability in the Middle East would come at a great cost, even if it weakens U.S. capacity to engage in rivalry with China.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Consider China’s energy demands.</strong>’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘While Russia</strong> is China’s top source for crude oil,&nbsp;<a href="https://www.cnbc.com/2018/09/03/china-demand-for-oil-is-a-serious-concern-for-the-middle-east.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">more than half of its crude oil imports</a> come from OPEC members.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Iran itself provides</strong> China 585,400 barrels of crude per day, accounting for roughly 6 percent of this total number.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘And while customs data show</strong> Chinese oil imports from Iran plummeting last year, this number&nbsp;<a href="https://www.bourseandbazaar.com/articles/2019/10/23/chinas-declared-imports-of-iranian-oil-hit-new-low-but-dont-believe-it" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">failed to capture&nbsp;</a>Iranian oil shipped to Malaysia and reexported to China in order to evade sanctions put in place by the Trump administration.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Any interruption to this supply,</strong> even one stemming from a U.S. intervention in the region, would be extraordinarily costly for China in the short run.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘As our colleague Jon Alterman said</strong> in a&nbsp;<a href="https://docs.house.gov/meetings/FA/FA13/20190509/109455/HHRG-116-FA13-Wstate-AltermanJ-20190509.pdf" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">recent congressional testimony</a>, “The region’s chokepoints—the Strait of Hormuz, the Bab al-Mandeb, and the Suez Canal—are China’s chokepoints.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘There are more</strong> than just energy supplies at stake for China.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Currently,</strong> an&nbsp;<a href="https://www.rand.org/content/dam/rand/pubs/research_reports/RR1200/RR1229/RAND_RR1229.pdf" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">estimated&nbsp;</a>half million Chinese citizens live and work in the Middle East.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Add to this</strong> China’s <a href="http://economist.com/middle-east-and-africa/2019/04/20/chinese-money-is-behind-some-of-the-arab-worlds-biggest-projects" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">growing investment portfolio in the region</a>, with more than $23 billion in loans and aid pledged to the region in 2018 and $28 billion in investment.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘These realities</strong> underpin Beijing’s clear and consistent calls for restraint by both the United States and Iran over the past week.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘China now</strong> has too much at stake in the region to see it devolve into chaos.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">4. Taiwan under the gun</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/77iA5I?track_p_id=2JR9EZtx0_aQ1fXiu5h2fb5" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/qAD7kBqLceF6aukL4-Brm0i__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/77iA5I?track_p_id=8PKZLJIRq9EZtx0_Y2Iop63" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Why Tsai Ing-wen’s Re-election as President Could Darken Taiwan’s Future</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">American Enterprise Institute (AEI)</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Oriana Skylar Mastro</strong> | Georgetown University &amp; AEI</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘For the first time in Chinese history, Xi will have at his disposal a military capable of forcing unification.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Tsai Ing-wen</strong> won a second term as president of Taiwan in elections on Saturday.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Tsai has explicitly rejected</strong> China’s formulation of “one country, two systems,” and her re-election will likely convince Chinese leaders that peaceful reunification is a pipe dream. They would be right.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Tsai’s victory</strong> will darken Taiwan’s future as the Chinese Communist Party comes to realize that the only way Taiwan will ever reunify with mainland China is at the end of a gun.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The enormity of the costs to China,</strong> both militarily and economically, in invading Taiwan have over the years reassured many that Beijing would never take up arms against Taiwan unless Taipei declares outright independence.’</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘But China under Xi</strong> is a different beast.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘He has publicly</strong> called for concrete movement toward reunification, an explicit demand that stakes his legitimacy on progress in that direction.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘By doing so,</strong> he moved the goalpost from preventing Taiwan independence, which means living with the 40-year-long status quo, to an actual change in the nature of the cross-strait relationship, which is substantially less achievable without the use of force.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘For the first time in Chinese history,</strong> Xi will also have at his disposal a military capable of forcing unification.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Chinese military modernization</strong> has been geared toward developing combat capabilities and training to invade and take the island.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘While many Western observers</strong> think China will be able to do so in the next five to eight years, Chinese military leaders have told me that they will be ready within a year.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘A Chinese attack on Taiwan</strong> would, of course, have major implications for the United States.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘While America</strong> no longer has a treaty commitment to defend Taiwan, the Taiwan Relations Act of 1979 specifies that “any effort to determine the future of Taiwan by other than peaceful means, including by boycotts or embargoes, [is] a threat to the peace and security of the Western Pacific area and of grave concern to the United States.”</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Practically,</strong> there would be serious pressure for Washington to come to Taiwan’s defense militarily.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div>

<div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="20" style="height:20px; font-size:0">&nbsp;</td></tr><tr><td style="vertical-align:top"><table cellspacing="0" cellpadding="0" width="100%"><tbody><tr><td style="padding-left:3.5%" a=""><a href="" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank" rel="noopener noreferrer" title="CHINADebate"><img width="100%" src="https://cdn.prod.website-files.com/5c864c33af62620dca1373ac/5d86577f82aa6e55afacb4ea_cd%20long-fit.png" alt="CHINADebate" style="width: 110px;"></a></td><td align="right" style="padding-right:3.5%"><a href="" target="_blank" rel="noopener noreferrer" style="color:#001544; font-size:13px; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;"></a></td></tr></tbody></table></td></tr><tr><td height="30" style="height:30px; font-size:0">&nbsp;</td></tr><tr><td style="text-align:center; line-height:1"><span style="font-size: 42px; font-family: gorditamedium, sans-serif; color:#0970b3; letter-spacing: -1px; line-height: 1;">China Macro Reporter</span></td></tr><tr><td style="text-align:center; line-height:1.5; padding-bottom:30px; padding-top:10px;color:#001544; font-size:0.8125em; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;"><span style="color:#001544; font-size:13px; font-family:'gordita', sans-serif; text-decoration:none; border-bottom:none;">by Malcolm Riddell<span style="margin:0 6px">·</span>Jan 11, 2020</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:20px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">Opening Statement</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/7y13ui?track_p_id=74pEX2AY6RBDzy_QbwSfCMY" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/uhp7CvL-kYuJYdwsZTPG2Ui__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/7y13ui?track_p_id=8Xk%40FkfGd6RBDzy_ECPJUQe" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">'Taiwan's Hong Kong Election'</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h1 style="display: inline-block;font-size: 1.35em;margin-top: 0em;margin-bottom: 0em;margin-left: 0;margin-right: 0;line-height: 1.35em;font-weight: normal;font-family: gorditamedium, sans-serif;color: #001544;letter-spacing: -0.1px;"><strong style="font-weight: bold">Greetings!</strong></h1><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">I watched run-up</strong> to and then the results of the Taiwan election today with special interest.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Personally,</strong> I lived in Taiwan for a dozen years and have great affection for the island. It is my true second home.</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Professionally,</strong> I knew that the re-election of President Tsai, who has taken a hard line against reunification with China, would escalate tensions with China.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Xi Jinping</strong> has called for reunification under the ‘one country, two systems’ model.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">With Tsai’s re-election,</strong> a large majority of Taiwanese, having watched how that model has worked in Hong Kong, have said no.</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Xi,</strong> facing continued unrest in Hong Kong and now meeting with a firm rebuff from Taiwan, may feel he has to act.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">In Hong Kong,</strong> Xi has a free hand; in Taiwan, not so much. &nbsp;</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">The constraint:</strong> the tacit, or some might argue legal, obligation that the U.S. has to defend Taiwan.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">For those tracking geopolitical risks,</strong> Tsai’s re-election has elevated Taiwan’s status as potential top flashpoint for military conflict between the U.S. and China.</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Let me know</strong> what you think.</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">And, as always,</strong> please forward the China Macro Reporter to your friends and colleagues.</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Best,</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Malcolm</strong></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:7px; border-left:0px solid #c80000; text-align:center; font-size: 1.5em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">1. Taiwan’s Hong Kong Election</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/6XaEwi?track_p_id=d3R4FwPIUJcBqj9BZDsE_BI" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/nDe_JxQeos0EJaQainsv9Ei__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/6XaEwi?track_p_id=6Katzsv9BZDsE_aURUAdQws" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">In Blow to Beijing, Taiwan Re-elects Tsai Ing-wen as President&nbsp;</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘The&nbsp;biggest risk for the new economy in 2020&nbsp;may well be tensions over Taiwan.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><a href="https://www.bloomberg.com/news/articles/2020-01-11/tsai-wins-second-term-in-landslide-as-voters-stand-up-to-beijing" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">Bloomberg.</strong></a><strong style="font-weight: bold"> ‘Taiwanese president Tsai Ing-wen</strong> won a landslide victory over China-friendly opposition challenger Han Kuo-yu to clinch a second term in elections Saturday.’&nbsp;</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Chinese president Xi has</strong> reaffirmed his desire to use the same “one country, two systems” framework by which Beijing governs Hong Kong to bring the democracy of 23 million people back under its control.'</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Tsai rejects the prospect</strong>, and she has vowed that Taiwan will never be unified with China as long she is in power.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><a href="https://www.nytimes.com/2020/01/11/world/asia/taiwan-election-china.html" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">NYT.</strong></a><strong style="font-weight: bold"> ‘Ms. Tsai’s victory</strong> highlighted how successfully her campaign had tapped into an electorate that is increasingly wary of China’s intentions.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘It also found momentum</strong> from&nbsp;<a href="https://www.nytimes.com/2019/12/07/world/asia/hong-kong-protests-us-chamber-commerce.html?searchResultPosition=2" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">months of protests in Hong Kong&nbsp;</a>against Beijing’s encroachment on the semiautonomous Chinese territory’s freedoms.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘In her victory speech,</strong> Ms. Tsai called for unity as she pledged to work to defend the island’s sovereignty and improve the economy.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“With each presidential election,</strong> Taiwan is showing the world how much we cherish our democratic way of life,” she said at a news conference in Taipei. “We must work to keep our country safe and defend our sovereignty.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><a href="https://www.wsj.com/articles/taiwans-hong-kong-election-11578614899?mod=searchresults&amp;page=1&amp;pos=4" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">WSJ Editorial.</strong></a><strong style="font-weight: bold"> ‘The effort to suffocate Hong Kong</strong> is a preview of what Chinese hegemony would look like, and it has loomed especially large in Taiwan’s presidential election campaign.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘A popular reassertion</strong> of Taiwanese de facto independence in Saturday’s vote would show revulsion with China’s tactics in its own neighborhood and strike a blow for U.S. strategy in the Indo-Pacific.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Taiwan’s position emphasizes</strong> how the U.S. competition with China is ideological as well as economic and military.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Bipartisan U.S. support</strong> for Taiwan is based on its identity as a free society. So is Beijing’s hostility.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘China’s rulers</strong> can’t tolerate the demonstration of a flourishing ethnic Chinese democracy.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The U.S. national-security strategy</strong> in Asia depends on a strong and independent Taiwan.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The country is home</strong> to a thriving high-tech industry that the U.S. doesn’t want under Chinese control, and it is located at a strategic crossroads in the western Pacific.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><a href="https://www.bloomberg.com/news/newsletters/2020-01-11/bloomberg-new-economy-taiwan-decides-while-beijing-watches" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">Bloomberg.</strong></a><strong style="font-weight: bold"> ‘Last year, Chinese President Xi</strong> Jinping made clear Beijing saw no future for Taiwan outside of the “one country, two systems” framework it used to retake Hong Kong from the British.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘That formula,</strong> however, is a&nbsp;<a href="https://esc.nccu.edu.tw/course/news.php?Sn=167" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">non-starter</a> in Taiwan.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘While Xi could choose </strong>to respond to pro-democracy protests in Hong Kong and pro-independence agitation in Taiwan with more flexible policies, don’t count on it.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘A more likely scenario</strong> is that he&nbsp;<a href="https://www.brookings.edu/research/taiwans-january-2020-elections-prospects-and-implications-for-china-and-the-united-states/" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">turns the screws even harder</a>.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘That outcome</strong> could further ratchet up tensions between Beijing and Washington.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The Trump administration</strong> has demonstrated its support for Taiwan through arms sales, by easing restrictions on high-level official contacts and by giving Tsai freedom to travel in America on stopovers.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘As long as the U.S. guarantees</strong> Taiwan’s security, Washington and Beijing will remain on a collision course.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The&nbsp;</strong><a href="https://www.bloomberg.com/news/articles/2020-01-10/u-s-and-china-are-on-taiwan-collision-course" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><strong style="font-weight: bold">biggest risk for the new economy in 2020</strong></a>&nbsp;may well be tensions over Taiwan.’</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Go Deeper.</strong><a href="https://www.cfr.org/in-brief/taiwans-presidential-election-what-know" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">'Taiwan’s Presidential Election: What to Know,'</a> Council on Foreign Relations</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">2. IRAN: TRUMP'S GIFT TO CHINA</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/4oQwOO?track_p_id=8ij22EB5I7PgXC2_pEF51r2" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/Tad6xj_ebVw7qqeNRLm3H0i__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/4oQwOO?track_p_id=dDfMlQMcZAiOh57PgXC2_AO" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Trump’s Gift to China by Minxin Pei</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Project Syndicate</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Minxin Pei</strong> | Claremont McKenna College</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘If anyone was celebrating Donald Trump's decision to kill Iran’s General Qassem Suleimani, it was Chinese President Xi Jinping. </strong>&nbsp;</h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘With Trump’s latest blunder,</strong> history may not be repeating itself, but it is certainly rhyming.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘When George W. Bush</strong> began his presidency in January 2001, his neoconservative advisers identified China as the biggest long-term threat to the US.’’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘So his administration</strong> labeled China a “strategic competitor” and set to work on containing America’s Asian rival.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Everything changed on September 11, 2001,</strong> when the US was struck by the single deadliest terrorist attack in history.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The Bush administration</strong> became so preoccupied with retaliating against al-Qaeda – an objective that led to the catastrophic decision to invade Iraq two years later – that it all but forgot the distant specter of an Asian superpower.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Then, just three months after 9/11,</strong> the Bush administration signed off on China’s accession to the World Trade Organization, and China’s economy shifted into high gear.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In 2000,</strong> China’s economic output amounted to $1.21 trillion – less than 12% of US GDP.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘By the end of Bush’s second term</strong>, in 2008, China’s GDP had reached $4.6 trillion – more than 31% of America’s.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Today,</strong> China’s GDP stands at about&nbsp;<a href="https://data.worldbank.org/indicator/NY.GDP.MKTP.KD?locations=CN-US" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">65% of the US level</a>.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Like Bush,</strong> when Trump entered the White House, his administration quickly branded China America’s top geopolitical adversary and adopted a&nbsp;<a href="https://www.project-syndicate.org/commentary/trump-china-policy-confrontation-engagement-containment-by-minxin-pei-2019-07" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">confrontational policy</a>, exemplified by a trade war that, despite a “phase one” agreement, has yet to be resolved.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In effect,</strong> Trump revived great power competition – focused primarily on containing China – as the organizing principle of US foreign policy.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Then Trump had Suleimani killed,</strong> and all eyes turned toward Iran.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘If the conflict continues to escalate</strong> – even if it stops short of all-out war – the US will most likely redirect significant resources toward confronting the Islamic Republic, and, like after 9/11, move China to the foreign-policy back burner.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Seventeen years ago,</strong> Bush entered into a war of choice in the Middle East that, besides costing huge amounts of US blood and treasure, derailed efforts to contain China.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">'Trump</strong> can still avoid making the same mistake.’&nbsp;</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">3. ‘The Future of America’s Contest with China’</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/8KvOiW?track_p_id=bd%40HrJSpsrzZ7bmPZ0_U2YX" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/DP5LqT6ppCqXfYHBoYI2x0i__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/8KvOiW?track_p_id=07bmPZ0_TQn4xaVpjYmwXds" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">The Future of America’s Contest with China</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;">&nbsp; &nbsp;<strong style="font-weight: bold">The New Yorker</strong>&nbsp;</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Evan Osnos</strong> | The New Yorker &nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘To a degree still difficult for outsiders to absorb, China is preparing to shape the twenty-first century, much as the U.S. shaped the twentieth.'</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Evan Osnos of The New Yorker</strong> is the author of <a href="https://smile.amazon.com/Age-Ambition-Chasing-Fortune-Truth/dp/0374535272/ref=sr_1_1?keywords=evan+osnos&amp;qid=1578758237&amp;sr=8-1" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;"><em style="font-style: italic">Age of Ambition: Chasing Fortune, Truth, and Faith in the New China</em></a>, winner of the 2014 National Book Award in nonfiction.</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">His latest essay,</strong><a href="https://www.newyorker.com/magazine/2020/01/13/the-future-of-americas-contest-with-china?verso=true" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">‘The Future of America’s Contest with China’ is equally excellent.</a></li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Long and covering many key issues,</strong> there is too much to summarize here. I urge you to read it. (Note: you may need a subscription to The New Yorker.)</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">Here is just a bit,</strong> Henry Kissinger’s comments</li></ul><p style="text-align: center;display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;________________________________</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Henry Kissinger</strong> ‘has come to believe that the two sides are falling into a spiral of hostile perceptions.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“I’m very concerned.</strong> The way the relationship has deteriorated in recent months will feed, on both sides, the image that the other one is a permanent adversary.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">Dr. Kissinger</strong> ‘considers America’s contest with China to be both less dire and more complex than the Soviet struggle.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“We were dealing with a bipolar world.</strong> Now we’re dealing with a multipolar world.”</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“The components</strong> of an international system are so much more varied, and the lineups are much more difficult to control.”</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘For that reason,</strong> Kissinger says, the more relevant and disturbing analogy is to the First World War.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In that view,</strong> the trade war is an ominous signal; economic polarization, of the kind that pitted Britain against Germany before 1914, has often been a prelude to real war.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">“If it freezes into a permanent conflict,</strong> and you have two big blocs confronting each other, then the danger of a pre-World War I situation is huge,” Kissinger said.'</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;">4. more decoupling: INTERNET SPLIT</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/5Q6urQ?track_p_id=05K2FX4_GIriMTxy3p31yH5" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/GMxAOlvRmMmRdcopsWzIo0i__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/5Q6urQ?track_p_id=3UO35K2FX4_lUSGE4RdFpiQ" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">The Coming End of the Open Internet Era</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Council on Foreign Relations</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Rob Knake</strong> | Council on Foreign Relations</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘At some point in the next decade, China will establish a separate root system for its share of the internet. When the split happens, we will mark it as the end of the global internet era.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘At some point in the next decade,</strong> the Chinese government, with the support of Russia and other authoritarian regimes, will move forward with plans to establish a separate root system for their share of the internet.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘When the split happens,</strong> we will mark it as the end of the global internet era.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Long a point of contention,</strong> control of the root, the top-level system for resolving requests for web addresses, has been hotly debated within internet governance circles.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The Obama administration</strong> moved forward with long-stalled plans to devolve control of the root from the U.S. Department of Commerce to ICANN as an independent organization with the goal of placing the internet firmly in the hands of the private sector and out of the realm of great power politics.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘For its part,</strong> ICANN has worked to placate the Chinese by establishing more&nbsp;<a href="http://domainincite.com/24690-paranoid-icann-opens-another-root-server-in-china" rel="nofollow" style="color: #001544;text-decoration: none;border-bottom: 1px solid #008dc8;">instances</a>of root servers in the country.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Unfortunately,</strong> these efforts have done little to slow Chinese ambitions to break from the global internet.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The reason is simple</strong>–a global internet that is open and free is not compatible with a Chinese state that views openness and freedom as a threat to its stability.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">It could, one day,</strong> for example, ‘amid escalating geopolitical tensions, China will drop the .tw routing information from its server, and, with a few keystrokes, drop Taiwan off the internet for half the world’s population.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘When the Chinese government</strong> takes this step in the next year or decade, it will have done is what they always feared the United States would do: use its control of the internet root as a geopolitical weapon.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Soon after,</strong> the Chinese government will use its newfound power to pressure other countries and companies to censor themselves or risk being similarly blackholed.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘When the root splits,</strong> the only question will be how much of the world’s population is on which side of the split.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;"> 5. World Bank Global Outlook</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/6SXrO4?track_p_id=7R5hli%40u4nUQeM_UAucWtTA" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/KLAK3bh_VqtwQE7To9B8PUi__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/6SXrO4?track_p_id=caOuYFmIlGd6j4nUQeM_cID" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Global Economic Prospects  2020 : Slow Growth, Policy Challenges</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">World Bank</strong></h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘Growth has decelerated more than previously expected amid cooling domestic demand and heightened trade tensions.’</strong></h2><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><br></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Terrific comprehensive </strong>World Bank analysis of the global economy.</h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Here is a short summary </strong>of the Global Outlook and the sections on China.</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><br></p><h1 style="display: inline-block;font-size: 1.35em;margin-top: 0em;margin-bottom: 0em;margin-left: 0;margin-right: 0;line-height: 1.35em;font-weight: normal;font-family: gorditamedium, sans-serif;color: #001544;letter-spacing: -0.1px;"><span style="color: #d0021b"><strong style="font-weight: bold">Global Outlook</strong></span></h1><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Global growth</strong> is expected to recover to 2.5 percent in 2020—up slightly from the post-crisis low of 2.4 percent registered last year amid weakening trade and investment—and edge up further over the forecast horizon.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘While growth could be stronger</strong> if reduced trade tensions mitigate uncertainty, the balance of risks to the outlook is to the downside.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Growth in emerging market and developing economies (EMDEs)</strong> is also expected to remain subdued, continuing a decade of disappointing outcomes.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘A steep and widespread productivity growth slowdown</strong> has been underway in these economies since the global financial crisis, despite the largest, fastest, and most broad-based accumulation of debt since the 1970s.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘In addition,</strong> many emerging market and developing economies, including low-income countries, face the challenge of phasing out price controls that impose heavy fiscal cost and dampen investment.’&nbsp;</li></ul><h1 style="display: inline-block;font-size: 1.35em;margin-top: 0em;margin-bottom: 0em;margin-left: 0;margin-right: 0;line-height: 1.35em;font-weight: normal;font-family: gorditamedium, sans-serif;color: #001544;letter-spacing: -0.1px;"><span style="color: #d0021b"><strong style="font-weight: bold">China</strong></span></h1><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Growth has decelerated</strong> more than previously expected amid cooling domestic demand and heightened trade tensions.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘After decelerating</strong> to an estimated 6.1 percent in 2019, growth is expected to moderate to 5.9 percent in 2020 and 5.8 percent in 2021—0.2 percentage point below previous projections in both years.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘China’s primary vulnerability</strong> is its high and rising stock of private debt in its increasingly complex and interconnected financial system.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Credit to non-financial corporates and households</strong> as a share of GDP nearly doubled in the last decade, reaching about 210 percent in the first quarter of 2019.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/uLcHsnoxzTrLgm1BnUdjCzl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; text-align:left;"><tbody><tr><td style="max-width:600px;"><span style="display:block; background-color:#c80000; font-family:'gordita', sans-serif; padding:5px; border-left:0px solid #c80000; text-align:center; font-size: 1.375em; font-weight:900; color: #ffffff; line-height:1.5em; letter-spacing:-0.1px; text-align:center; font-style:none; text-transform:uppercase;"> 6. 'VISUALIZING 2020'</span></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/6HTVJY?track_p_id=dT5TWHEqZ42VEN5qgwda_Y6" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/2CcBybgkmUCTZbLI5Tbnzki__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/6HTVJY?track_p_id=5mEA%40G5qgwda_u2Gj4tOM3q" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Visualizing 2020: Shifting Supply Chains</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Council on Foreign Relations</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Edward Alden</strong> | Council on Foreign Relations</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">&nbsp;</strong></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘While the United States is slightly shrinking its trade deficit with China, it’s rapidly expanding its one with Vietnam.</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The trade war</strong> that started last year intensified in 2019, with President Trump’s administration levying tariffs on some two-thirds of imports from China.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘U.S. companies</strong> with supply chains that run through China are responding, in many cases looking to import from other countries, particularly Vietnam.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘While the United States</strong> is slightly shrinking its trade deficit with China, it’s rapidly expanding its one with Vietnam.</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘The pace of change</strong> varies by sector.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘For instance,</strong> the furniture trade, which has been hit with a steep 25 percent tariff, is changing fast as U.S. companies seek out new, lower-cost suppliers.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The shift</strong> has been less dramatic in the trade of washing machines and apparel, which face lower tariffs, but China is still losing ground.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘If the trade war</strong> continues into 2020, more and more U.S. importers are likely to seek alternatives to China, moving toward the decoupling favored by some in the Trump administration.’</p><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/YbtWyjgiXGxi5nx3o9aDFDl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/6YIVou?track_p_id=8EigN6cQR6tpszO_ADETVd4" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/2CcBybgkmUCTZbLI5Tbnzki__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/6YIVou?track_p_id=06tpszO_OguBqbR1IqD6Dmw" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Visualizing 2020: China's R&amp;D Sprint</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Council on Foreign Relations</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Adam Segal</strong>&nbsp;| Council on Foreign Relations</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">&nbsp;</strong></p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘China is well on its way to becoming the world’s largest spender on research and development (R&amp;D).’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘China is investing</strong> enormous resources to develop the next generation of critical technologies, and it is well on its way to becoming the world’s largest spender on research and development (R&amp;D).’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Beijing’s sprint</strong> to become an innovation superpower could help drive global growth and prosperity, but it also threatens U.S. economic competitiveness and national security.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘It’s not too late,</strong> however, for leaders in Washington to take remedial action and dedicate more funding to the basic research that is too expensive and risky for the private sector.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The United States</strong> still leads the world in total R&amp;D spending, and it could remain competitive if the government restores investments in this area to prior levels.’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Boosting federal R&amp;D spending</strong> to its historical average of about 1 percent of gross domestic product (GDP)—some $230 billion—could ignite the type of discoveries that have reshaped and revitalized the U.S. economy.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/KtKLf3cmi9dNElKd6_VpZjl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; background-color:#fff; padding-bottom:10px; margin:0 auto 10px auto; border-bottom:1px solid #ddd;"><tbody><tr><td style="max-width:600px;"><img src=""></td></tr></tbody></table></div><div><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; text-align:left; background:#fff"><tbody><tr><td height="12" style="height:12px; font-size:0; border-top:1px solid #ddd;"></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:0 auto; border-bottom: 0px solid #ddd; text-align:left; background:#fff;"><tbody><tr><td width="45px" style="display:block; overflow:hidden; margin-left: 20px; margin-top:2px; border: 1px solid #ddd; border-radius:10%; box-shadow: 0 4px 8px 0 rgba(0, 0, 0, 0.2), 0 2px 6px 0 rgba(0, 0, 0, 0.19);"><a href="http://sco.lt/7iFYFE?track_p_id=e3yrrySty%404WAsu5WFpGw_a" style="border-bottom: none;color: #001544;text-decoration: none;" target="_blank"><img height="45px" width="auto" src="https://img.scoop.it/2CcBybgkmUCTZbLI5Tbnzki__cjguAuwrRM5-qsdIhQ=" style="display:block; border:none; width:auto;"></a></td><td width="100%" style="padding-left:5%; padding-right:3.5%; line-height:1.425"><a href="http://sco.lt/7iFYFE?track_p_id=3aNn5WFpGw_hrvowVXAkpfZ" style="text-decoration: none; color: #001544; font-weight: bold; font-size: 1.35em; font-family: Georgia, serif; letter-spacing: -0.1px; line-height: 1.35; border-bottom:none;" target="_blank">Visualizing 2020: Changing Asian Demographics</a></td></tr></tbody></table></td></tr><tr><td><table cellspacing="0" cellpadding="0" style="max-width:600px; width:100%; margin:10px auto 0 auto; border-top: 0px solid #ddd;"><tbody></tbody></table></td></tr><tr><td style="padding:0 3.5%; margin: 0 auto; font-size: 1em; font-family: gorditamedium, sans-serif; color: #001544; line-height: 1.5em; letter-spacing:-0.1px;"><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p><h3 style="text-align: right;display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Council on Foreign Relations</strong></h3><h3 style="display: block;font-size: 0.85em;margin-top: 0em;margin-bottom: 0.1em;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #5d5d5d;letter-spacing: -0.1px;line-height: 1.35em;"><strong style="font-weight: bold">Sheila A. Smith</strong> | Council on Foreign Relations</h3><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;">&nbsp;</p><h2 style="text-align: center;display: block;font-size: 1.25em;margin-top: 0;margin-bottom: 0;margin-left: 0;margin-right: 0;font-weight: normal;font-family: Georgia, serif;color: #c80000;border-top: 0px solid #ddd;padding: 0.5em 3.5% 0.5em 3.0%;letter-spacing: -0.1px;line-height: 1.35em;background-color: #f6f6f6;"><strong style="font-weight: bold">‘The region’s largest economies—China, Japan, and South Korea—will need to manage a profound demographic shift.’</strong></h2><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘Asia has become the engine</strong> of the global economy, but the region’s dynamism could fade as some powerhouses face aging populations.'</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The region’s largest economies</strong>—China, Japan, and South Korea—will need to manage a profound demographic shift in which their workforces steadily shrink and are potentially surpassed by the nonworking populations.’’</li><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘The implications</strong> for these societies, their governments, and their foreign relations will be immense.’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"><strong style="font-weight: bold">‘On the other hand,</strong> some Asian nations are set to grow their workforces.’</p><ul style="margin-top: 0px;margin-bottom: 0.5;"><li style="margin-top: 0.5em;margin-bottom: 0em;"><strong style="font-weight: bold">‘Can they harness</strong> this trend to power their economies ahead of their neighbors?’</li></ul><p style="display: block;margin-top: 0.5em;margin-bottom: 0.5em;margin-left: 0;margin-right: 0;font-size: 1em;font-weight: normal;letter-spacing: -0.1px;line-height: 1.5em;color: #001544;font-family: gorditamedium, sans-serif;"></p></td></tr><tr><td height="0" style="height:0px; font-size:0; border-bottom:0px solid #fff">&nbsp;        </td></tr></tbody></table></div><div><table align="center" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr height="0"><td width="0"></td></tr><tr><td width="0"></td><td align="center"><div style="width:600px;"><img src="https://img.scoop.it/UggAIy0-_LLoZAiTQsmzejl72eJkfbmt4t8yenImKBXdhNIf0Yl8YfRAVzhohB7e" style="border-style: none;" alt=""></div></td><td width="0"></td></tr><tr height="0"><td width="0"></td></tr></tbody></table></div>