SinoInsight 1
Zhao Jinping, the head of the Foreign Economic Research Department of the Development Research Center of China’s State Council, said at a government-held forum on June 28 that China should “rationally refute” past rhetoric such as “China’s strength vastly exceeds the United States” or “China is number one in the world.” He also encouraged China to abandon “dangerous thinking” and have an “objective grasp of reality.”
On June 23, Liu Yadong, the editor-in-chief of the Ministry of Science and Technology’s official newspaper, said at a science forum that it is “common knowledge” that China’s science and technology is very much behind America and other developed Western countries, but the fact was “not a problem.” What was a problem, he said, was that “some people” kept boasting of China’s “four great new inventions” or claim that China had “comprehensively overtaken” the U.S. in economics, scientific and technological advancements, and as a nation to become the foremost country in the world. Liu added that people who make such arguments are “deceiving the leadership, the public, and themselves,” and their arguments have “become a problem.”
OUR TAKE
1. The Chinese regime is sending out contradictory signals before the first round of Chinese and U.S. tariffs take effect on July 6. On the one hand, Xi Jinping told the chief executives of American and European multinationals in a meeting on June 21 that China would “punch back” in a trade war with the U.S. On the other hand, Chinese officials like Liu Yadong and Zhao Jinping are downplaying the regime’s earlier boastful rhetoric on national prowess.
2. The Sino-U.S. trade dispute exposes the Chinese Communist Party’s lies and propaganda on economic and technological progress, and shows that the emperor has no clothes. Chinese netizens have been noticing and writing about how the CCP doesn’t have an effective strategy or the means to get ahead of America on trade, and that China would be crushed in a full-blown trade war.
Meanwhile, the CCP elites are caught in a Catch-22 situation. The elites want to resolve the trade conflict, but cannot appear to show any weakness while doing so least the CCP political system produces a backlash. Hence, we see Xi talk about retaliation to project toughness while lower officials signal the reality of a “(Not so) Amazing China” possibly as an attempt to lower America’s wariness to Chinese science and technology. Given the Trump administration’s “eyes-wide-open” attitude towards authoritarian regimes and the Chinese people’s “trade war awakening,” the result of the CCP’s conflicting messaging may be self-deception and future embarrassment.
3. Given that China cannot withstand a trade war with the U.S., we believe that the CCP elite would wish to seek more negotiations with America to prevent the escalation of the trade dispute. However, an opportunity to talk doesn’t appear to have manifested at present.
