Don't assume Xi can outwait Trump on a trade deal:
Largely overlooked by American media, the Chinese banking system increasingly appears to be the economic equivalent of Chernobyl. After a decade of massive credit expansion, with tens of trillions of dollars’ worth of loans being funneled into projects based on the whims of central planners, rather than actual Chinese entrepreneurs, there is growing concern that their banks are full of toxic loans. Three banks have had to be publicly bailed out by Chinese officials in recent months, each one larger than the last.
While there has been much talk of potential retaliatory measures from China against the United States for the trade war — such as selling off U.S. debt or attacking the dollar with a gold-based yuan — the reality is that China’s bigger issue is desperate need of more dollars. While the Bank of China can inflate away debts denominated in their own yuan, the country needs foreign currencies to pay for loans made in dollars and euros. Hedge fund manager Kyle Bass has identified a dollar shortage as one of the potential catalysts to an all-out crisis in China.
In our system, a former president gets rich and a life of leisure.
In China's system, a former ruler could get shamed and disappeared (along with his family and friends).
And the funny thing is, a trade deal would likely only paper over the problems of China's command economy that isn't free market capitalism at all.
So there's that.
