EMERGING MARKETS by Marc Chandler


FX


THE STEADY ASCENDANCE OF CHINA


While the pundits are talking trade wars, Chinese officials are taking the latest US provocations in stride.


Pressure on China’s


trade practices are not new. The US has been complaining about intellectual property violations since Bill Clinton was President. China’s trade practices have also raised the ire of US and Europe, which has resulted in tens dozens of anti-dumping action.


of


China’s emergence on the world stage was always going to be disruptive.


Even if it played


by the rules, its sheer scale is daunting. By threatening the economic equivalent of “mutually assured destruction”, the Trump Administration will likely win Chinese concessions. It seems that many of the concessions, like a better defense of intellectual property rights and a reduction of tariffs, are low hanging fruit, and actions Chinese officials were likely willing to make given their own domestic agenda.


Chinese officials, like other foreign officials are trying to understand


the Trump Administration as it represents a break from the past, and, America’s commitment to the multilateral trading system. Many of the Administration’s trade officials got formative experience trying to open Japanese markets in the 1980s. So-called voluntary export restrictions


and orderly


market agreements (quotas) were used and to some extent were effective.


China recently launched an oil futures contract denominated in yuan. It is far too early to evaluate


FX TRADER MAGAZINE April - June 2018 39


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