China and the U.S. have officially drawn lines in the sand regarding trade and tariffs. China seems to be digging in for the long term and looking for allies. Arlan Suderman, Chief Commodities Cconomist for StoneX, says China’s government released a video this week looking to smear the United States.
“China’s Foreign Ministry released a video with bilingual subtitles titled, ‘Never Kneel Down,’ and it was obviously a propaganda video, but its purpose seemed to be to get other countries to join it in standing up against the quote, unquote, ‘bullying of America.’ China is trying to get other countries to stand beside it because it knows that 100 countries want to negotiate lower tariffs, and it is expecting what I’ve said previously, that those negotiations will include clauses that help contain China.”
He says China sees the U.S. negotiating with so many countries as a direct threat to their economy.
“It sees this as a defining moment here in whether it’s going to ever be able to achieve its goal of becoming the number one economy and the number one military in the world. I think President Trump understands that as well, so this is about far more than trade and tariffs. This is about restructuring the world order and taking it in a direction that’s different from what China wanted, so they’re seeing no benefit from compromising at this point in negotiating. Meanwhile, back home in China, where they control the message, people are being told that America has been the bully and America has been the one with the unfair trade practices for many years and that it’s about time somebody stood up to America.”
Suderman doesn’t expect an agreement with China anytime soon.
“Xi Jinping is the one who has the courage to stand up to America, and so a sense of nationalism is very strong in China right now, and Xi Jinping’s popularity is very high. And so, if he negotiates, he risks looking weak in doing so, and that’s also an incentive for him not to negotiate. I don’t expect an agreement with China anytime soon. A little bit sobering related to that, USDA currently projects ending stocks of soybeans in China at 44 million metric tons. That’s surplus supplies. That’s nearly twice what they bought from us this year.”
Source: NAFB News Service
