Two tweets by President Donald Trump about raising tariffs on Chinese goods caused Chinese stock markets to tumble and media to speculate that the trade negotiations with China wouldn’t go forward.
And while Chinese official media have been silent on Trump’s decision to raise tariffs, Chinese netizens are celebrating and calling Trump the “Great Savior” of the Chinese people.
On the morning of May 5, Trump wrote in a tweet that he would raise tariffs on $200 billion of Chinese goods from 10 percent to 25 percent on May 10, and tax the currently untaxed $325 billion of Chinese goods at a rate of 25 percent “shortly.”
In a second tweet, Trump said: “The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”
Trump’s new stance apparently has taken Chinese officials by surprise, who were hoping that a deal would be reached soon.
Although the Chinese official media failed to report the story, Chinese stock markets reacted quickly on May 6, with the Shanghai Composite index closing down about 5.6 percent, which marked its worst one-day loss since a 6.4 percent slump in February 2016.
The smaller-cap Shenzhen Composite index plunged 7.4 percent, also its worst one-day percentage fall since February 2016. Hong Kong’s Hang Seng Index fell 2.8 percent. The combined losses of the Shanghai and Shenzhen markets reached 2.8 trillion yuan ($420 billion), with a net outflow of foreign capital of 8.19 billion yuan ($1.22 billion).
Over 1,000 stocks dropped 10 percent in value, the point at which trading is automatically stopped.
Just ahead of Shanghai’s open, China’s central bank moved to stimulate the economy by cutting reserve requirement ratios for 1,000 rural commercial banks, which will make it easier for small and micro companies to borrow. This amounts to making available for borrowing about 280 billion yuan ($41.57 billion) in funds.
Although there have been media reports about Beijing considering pulling out of trade negotiations after Trump’s announcement, the regime’s official news agency, Xinhua, reported on May 6 that “the Chinese delegation is preparing to go to the United States to negotiate.”
According to Xinhua, foreign ministry spokesperson Geng Shuang responded to a question related to Trump’s tariff hike announcement at a regular press conference on May 6.
“Similar situations in which the U.S. threatened to pose tariffs on Chinese goods have occurred multiple times before … We still hope that the U.S. and China can work together, walk towards each other, and try to reach a mutually beneficial agreement based on mutual respect,” Geng was quoted as saying. “What I can tell you here is, that the Chinese delegation is preparing to go to the United States to negotiate.”
According to South China Morning Post, Chinese Vice Premier Liu He could still lead the 100-person delegation that planned to travel to Washington on May 8.
Media Silent; Netizens React
According to Chinese political and economic analyst Qin Peng, after Trump’s surprising tweets, the first two Chinese departments that reacted were the Chinese Propaganda Ministry and Central Cyberspace Affairs Commission. They sent out emergency notifications in the middle of the night, Beijing time, that forbade coverage and discussion of the tariff increases on official media and social networks.
That’s why on websites inside China, virtually nothing about the latest twist in the trade war has been discussed, and some have been making off-track speculations about why the central bank suddenly decided to cut the reserve requirement ratios.
On Twitter and Facebook, which are banned in mainland China, savvy Chinese netizens who know how to “jump over the Great Firewall” that censors the Chinese internet are getting uncensored information. Many of the Chinese on these platforms are celebrating and praising Trump’s decision.
One tweet by user “Swedenhermit,” translated from the original Chinese, reads: “After Trump tweeted about raising tariffs (on Chinese goods), Chinese netizens on Twitter are all celebrating and praising this. I also sincerely hope that this negotiation will fail and tariffs will be raised (as announced by Trump). I also hope that more tariffs will be imposed on all remaining untaxed goods. Thus, the Chinese Communist Party will run out of money soon. Even if these things really happen, regarding Trump, I still want to say, ‘Tactically, he is very smart; but strategically, he is not as great as people expect him to be.’ He is an ‘America First’ president. All his attacks are for the purpose of defense. However, as long as he perseveres to the end, that’s enough!”
Some other Chinese netizens are posting memes about Trump on Facebook.
One meme was created based on a famous CCP propaganda image depicting Chairman Mao as the “great savior” of Chinese people. But Mao’s photo is replaced with Trump’s, with a Chinese slogan saying, “Trump Is the Great Savior of the Chinese People.” With a careful look, one can see in the image a very typical “revolutionary peasant” woman, holding a sign that says “We Love Trump.”
Another meme shows Trump in the White House proudly signing a document that says, “It is I who knocked down the Chinese stock markets.” Chinese leader Xi Jinping appears looking somewhat helpless and lost.
According to Cao Ji, a former professor at a university in Shanghai who currently lives in Taiwan, Trump suddenly decided to accelerate the trade war for the following reasons:
- U.S. stock markets have gone too high and need to be corrected so that the Fed can decide to cut rates and restart quantitative easing in June.
- The United States will soon roll out a $2 trillion infrastructure plan. By accelerating the trade war with China, Trump can effectively prevent the CCP from participating in this plan.
- Bothered with the difficulties caused by an outbreak of African swine fever and economic downturn, the CCP is eager to make concessions to prevent further inflation.
- The CCP is eager to make peace with the United States to prevent foreign funds from escaping China.
Qin Peng said he agrees with Cao Ji’s views and that the CCP has no way to fight back.
At a recent “Committee of Present Danger: China” event in Washington, Rep. Scott Perry (R-Pa.) said he believes that Trump should go beyond trade itself.
“I do applaud this president. Like I said, he’s gone further than any in modern history regarding China,” Perry said, “However, we also should be mindful of the time that this president has. … We expect immediate results. We can’t even wait for this trade deal.”
Perry said with the CCP’s “you might have the watch, but we’ve got the time” mentality, the United States needs to adopt very robust and more significant actions to force China into good behavior.