As the trade war continues, internal challenges are cropping up in both China and the United States. A new round of tariffs worth $16 billion in Chinese exports kicked in on Thursday. China has retaliated in kind. Curiously, the South China Morning Post reported that President Xi Jinping has declined to send his top lieutenant – Vice President Wang Qishan, known for his strong relationships in Washington – to try to hammer out a deal with the U.S. This comes a month after Xi pulled his top economic adviser, Liu He, from the front lines of the trade war, supposedly because of the belief in Beijing that Xi failed to anticipate the White House’s willingness to escalate the conflict. These moves reflect a growing sense in Beijing that there is no end in sight, and that the best it can do is contain the fallout at home.
The “good” news for China is that the yuan fell slightly again, having stabilized slightly this past week. This will help make Chinese exports cheaper, offsetti