Trade War?

Oh, it's true! China is totally freaking about Taiwan's crunk up hook up with Great Satan!

Threatening santions against cats who help Taiwan to feel secure, China may be sounding so furious because the real deal is to discourage Great Satan from future arms sales - like the fighter jets and submarines which Taiwan really wants.

"China is in danger of making a serious and counter-productive mistake:

"Both sides are wearily familiar with each other’s position on Taiwan. But China’s decision to threaten sanctions over the arms-sales package represents an escalation of Beijing’s normal fierce verbal condemnation.

"If China presses ahead with sanctions on big US exporters, such as Boeing, it risks unleashing a tit-for-tat round of trade sanctions that would damage China much more than the US. Comments by senior US officials at the World Economic Forum in Davos and elsewhere confirm that protectionist sentiment is on the rise in the US. With US unemployment in double-digits and a huge trade deficit with China, complaints about Chinese currency manipulation are getting a ready hearing in Washington.

"If China appears to be actively initiating a trade war, the American reaction may well be: “Bring it on.”

"China’s decision to escalate the dispute over Taiwan is all the more foolhardy given the long-term trends are moving in China’s direction – with the Taiwanese government playing down talk of independence and embracing much closer relations with the mainland.

"Under the circumstances Beijing should resist any moves towards a trade war that would be dangerous for the world and especially dangerous for China, the world’s biggest exporter of manufactured goods.


Stratfor points out the world is watching...

"The Chinese economy, for all its rapid growth, is fundamentally misaligned, and its leaders are struggling to make adjustments that could prevent future financial catastrophe without triggering immediate social destabilization. Since Beijing remains export dependent, and the U.S. market is critical, Beijing cannot push too hard

"But that does not mean the Chinese threat is without significance. China’s options are limited because of its exposure to the U.S. economy. But there are plenty of other states that are less exposed to the United States that could find reason to impose retaliatory sanctions for what they see as harmful U.S. policy

Pic "Constructive Partner or Emerging Threat?