The shills over at the Minnesota based hedge fund, Pine River, are making the media rounds these evening, after issuing a letter featuring a Hong Kong Professor named James Wang who said China would defeat the United States in a trade war. The entire article is suspect and wreaks of enemy propaganda.
Have a look, penned by <<<Bei Hu>>> (hmm).
This is what Wang had to say about a prospective trade war with the US, which includes Trump slapping the shit out of China with 45% tariffs.
“By design, decision-makers in a democracy face difficulties coordinating a relief effort and must eventually face a political backlash from impacted domestic producers,” Wang wrote. “On this basis, the Chinese may have more runway to play the long game in a trade war.”
“The balance of power worldwide is much more diffuse compared to the early 20th century, and players like China and India have emerged to create new political centers of gravity,” Wang wrote.
“However, as economic and political paralyses spread across the developed world, the most likely outcome is a trade war.”
In other words, Pine Capital believes America is finished and the balance of power now lies in Beijing.
The math, however, tells a different story, as China enjoys nearly a $300 billion per annum trade surplus with the United States, wholly dependent on the US consumer to keep their bedraggled populace at bay, saddled with incredibly high levels of debt (250%+) and soaring NPLs.
Goldman analyst, Kinger Lau, believes punitive tariffs will clown-rape China's GDP by 3% in 2017. Kevin Lau from Daiwa Capital isn't as optimistic as Goldman. He thinks an American-Sino trade war will result in an 87% drop in Chinese exports to the US -- a drop of $420 billion. That would equate to a 4.85% blow to the Chinese parasitical 'economy.'
Even in a Trump light environment of just 15% tariffs, Chinese GDP stands to drop by 1.8%, according to Daiwa.
China's protest would involve selling US treasuries, which have proven to be meaningless with QE programs and they might give Boeing, Ford and GM the boot. They might shut down a few disgusting KFC restaurants too.
Bottom line: Investors freak the fuck out when China misses by one tenth of one percent. Can you imagine if Chinese exports dropped by $420 billion or 87%?
Pain.
Content originally generated at iBankCoin.com