Trade war between US and PRC

I originally wrote this on April 8, and the drama has been developing and dramatic daily. I am updating the data but keeping the same points.

The PRC's stock (SSE Composite Index) dropped 3.5% since Trump's liberation (tariff announcement) on April 2, while the PRC's mouthpieces doing non-stop saber-rattling. The PRC's counter-tariff rate has gone from 34% to 84% and is at 125% now.

Though PRC stock market is essential a casino, its fluctuations do reflect street sentiments. However, the PRC government appears to be coordinating the effort to prop up the casino according to their mouthpieces.

However, the street sentiment is not necessarily the same as the only sentiment that matters - the middle school dropout's sentiment.

IMHO, one possibility is the following:

The middle school dropout is known to admire the monster Mao, who purged his father, and recently restored the worship of Mao. He may choose to fight this trade war by following in the footsteps of Mao for multiple reasons.

Mao was used by Stalin and sent over a million PVA cannon fodders to save the Kim dynasty by pushing Americans to the 38th parallel with a casualty ratio of 9:1. With the help of propaganda, Mao is viewed as a great leader with the courage and wisdom to fight and defeat America to protect the PRC.

The PRC is experiencing severe economic problems with true youth unemployment rate in high double digits. The discontent with the middle school dropout, both inside the party and outside in the streets, is palpable. A common trick used by dictators to strengthen their power is starting a war. A good example is the Moscow KGB thug. His approval rating soars whenever he starts a war. It has long been feared that the middle school dropout may invade Taiwan to rally the cattle on his animal farm when there is a domestic crisis. The trade war with the US may serve the purpose. He can urge his cattle to bear any suffering and blame the US for it.

He grew up with the famous slogan written everywhere - self-reliance and hard work(自力更生 艰苦奋斗), Mao's quote. They started to use this frequently again recently.

With the Western alliance fractured by Trump, he has additional incentives to fight the trade war that he has been preparing for in the past 5 or 6 years.

This is just one possibility. I do not mean this is the likely path. I cannot estimate the probability. We will likely find out this in the coming weeks.

The US is supposed to have the upper hand in this trade war due to its large trade deficit with the PRC ($295B, exports: $144B, imports: $439B). US exports to the PRC account for 0.6% of its GDP, while the PRC's exports to the US account for 2.5% of GDP. The US can find alternatives to the PRC's products, but the PRC cannot find any replacement for the US market.

The PRC's edge over the US is that the cattle on their giant animal farm can take much more pain than US voters as long as they can maintain their Orwellian control.

Dow Jones has dropped 6.6% since the tariff day.