Why China ‘holds all the aces’ in a full-blown US-China trade war

CNBC has the article Why China ‘holds all the aces’ in a full-blown US-China trade war.

Here is something that is news to me.

The current $370 billion deficit estimate does not account for value-added. When looking at the value-added content of Chinese exports, the U.S. deficit with China is actually only half of what it seems. And if we then add back the U.S. surplus in “invisibles” and how much money the United States brings back from investments in China, the U.S.–China deficit shrinks from 2 percent of U.S. GDP to 0.8 percent, a report from Oxford Economics revealed.

Here is the bottom line.

Above all else, the Trump–Xi trade shenanigans seem to underscore the different agendas at play here: one oriented toward political posturing and “winning” against a dubious scorecard, and the other focused on economic realities and a long-term development strategy. While the United States will undoubtedly declare victory, China seems to hold all the aces.

It seems like China is the adult in this game, and Trump is the childlike novice. For a country that claims to be a capitalist country, we don’t seem to really know how to play the capitalist game very well.

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