A Path To War? China Cancels US Trade Talks As ‘Skirmish’ Escalates

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Originally appeared at ZeroHedge

Following a surge in Chinese, European, and much of the US equity markets this week amid hopes that the so-called ‘trade skirmish’ was less ‘war-like’ than expected, China just dropped an early Saturday morning (local time) tape bomb that is sure to resurrect ‘trade war’ talk.

A Path To War? China Cancels US Trade Talks As 'Skirmish' Escalates

After President Trump slapped a fresh round of tariffs on Chinese goods, targeting 10 percent duties on $200 billion of goods; the two camps were scheduled to meet in order to dial back tensions. As we noted earlier in the week, China had ‘downgraded’ the team with a mid-level delegation from China due to travel to the U.S. capital to pave the way for Vice Premier Liu’s visit.

A Path To War? China Cancels US Trade Talks As 'Skirmish' Escalates

That was what sparked hope that this was just a trade skirmish (as Jamie Dimon attempted to play down), sending stocks soaring all week.

However, that is all over now.

The Journal  just reported on Friday that, according to sources, China has rescinded the proposals to send two delegations to Washington.

Chinese officials have said such pressure tactics wouldn’t induce them to cooperate.

By declining to participate in the talks, the people said, Beijing is following up on its pledge to avoid negotiating under threat.

“Everything the U.S. does hasn’t given any impression of sincerity and goodwill,” Chinese Foreign Ministry spokesman Geng Shuang said at a press briefing Friday.

“We hope that the U.S. side will take measures to correct its mistakes.”

*  *  *

The timing of this news, after the exuberant equity week, is also noteworthy as it follows Ray Dalio’s, founder of Bridgewater, warnings that the current trade tensions mirror those of the 1930s:

“I think that the 1935-40 period is most analogous to the current period and that it is worth reflecting on what happened then when thinking about US-Chinese relations now. 

To be clear, I’m not saying that we are on a path to a shooting war, but I am saying that we have to watch what path we are on, given these cause-effect relationships that history has taught us and that are described in the template. This excerpt describes how the economic and political conditions of the late 1930s evolved into the wars that followed. “

Read more here…

We have discussed this case-effect relation before…

A Path To War? China Cancels US Trade Talks As 'Skirmish' Escalates

Get ready for some Sunday night futures fun and games…

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  • Tommy Jensen

    So China is asking USA to show “sincerity and goodwill” by cancelling a meeting in U.S.
    You are doing that?

    All right, then we are imposing $400 billion tariffs more on China´s goods and all Chinese visiting US have to pay $5000 to get in, and $5000 to get out again……………………………LOL.

    You are talking about war? Ok, then we are sending 5 US Air-carrier fleets to South China Sea where they will declare a no-fly zone over the entire South China Sea which will be renamed to America´s Sea.
    Your yellow rice card next…………………………………LOL.

    • Jesus

      US carrier task forces are sitting ducks against DF 21 and an assortment of Mach 3 cruise missiles, they are not going to get any closer to the South China Sea islands than 600 kms.

      Trump opened a can of worms with the trade war against China, US as a consumer market is NEEDY for goods made in China, Xi is going to fight this trade war for the long term.

      • Tommy Jensen

        Just wait until millions of containers with plastic toys are stuck in China. China will soften. Trump as a casino owner knows their soft spot.

        • Jesus

          Trump and his casinos went bankrupt because of excessive debt.
          Trump and US will follow the same steps leading to a looming bankruptcy.

        • Tudor Miron

          China is used to survive on one can of rise per day. I doubt that USA has similar endurance. On more serious not – those that don’t realize that Trump and China are simply playing “double pass” (not sure if that is courrect translation of играть на два паса) are going to be surprised fairly soon. Many still think that Trump is simply stupid but they simply don’t understand his objectives.

        • Sinbad2

          Just wait till the prices of those plastic toys increases by 20% in American stores.
          You haven’t thought this through, you pay the tariff, not China.

          Trump cut taxes to the rich, and is now increasing taxes on the poor.

    • Ricky Miller

      All China has to do is move $150 billion in U.S. Treasuries to a liquidity account and offer it for sale in ten segments between now and December 31st. Discount the sale price at 20%. The United States will suddenly have problems financing debt. Interest rates will climb, doing real damage to America’s debt ridden economy. In January the Chinese can move another $150 billion to the same sale managers and look the U.S. in the face: “now about your recent lapses in judgement. Are you going to fix those of are we on to another fire sale?”

      • Tommy Jensen

        Chinese always look down, everybody look down, when they talk with an American.

      • putinbeater

        nothing would happen, china would sell under real value within 1 week. so only china would lose.

        • Ricky Miller

          Right. Because hundreds of thousands of people in the bond markets worldwide are going to pay full price for current full price bonds that mature full term when they can buy a partial term bond, with the same multiple annual dividends, at a significant discount. China loses some savings but keeps her much more lucrative revenue streams from trade. Americans are already going to be complaining this holiday shopping season as they fork out higher prices for holiday shopping trips because of the tariffs. The U.S. economy cannot function in it’s post Carter and post Gold standard departure with sustained higher interest rates.

        • Sinbad2

          Already the US Government is getting Government departments to buy Treasury Bonds. That is, the US Government is lending money to itself. The various departments only have 2 choices, cut expenditure, or get more from the Government. That is why US debt is now increasing by 1 trillion a year, and it will rise even faster as time goes on.
          The US is like a guy who cannot make his monthly credit card payment, so gets another credit card to pay the first card repayment.
          The US is cactus, and will be lucky to last the year, unless they make massive spending cuts, or increase taxes.
          The tariffs on Chinese goods are more taxes, Americans will pay, not China, but it is not enough, that’s why Trump will keep increasing the tariffs.
          Of course 50% of American Government discretionary spending is on defense?

    • Promitheas Apollonious

      I think in your hallucinations, you mistaking china with panama and usa for something she never manage to become, since the colony been created.

      • Tommy Jensen

        Nobody are challenging America´s power without ending up in deep sh.t. Nobody. America is a nation of winners.

        • Stephan Williams

          Stop it, Tommy! Stop it! My belly’s aching from all the laughing. LMAO!

        • Promitheas Apollonious

          a nation? nice joke. hahaha. that is exactly what the colony never achieved, to be one. You are a colony of helots serving your master until he has no use for you, or another major war that they beg to have but none any longer take seriously the morons who rule you and your allies.

          Winners………… so that is why you lost all wars you been into. Stop confusing holywood movies and reality.

          • Bill Wilson

            So which shit hole country do you live in?

          • Sinbad2

            So you reckon your shit hole is better than his shit hole?

        • Tudor Miron

          Good one. Thanks for the lough.

        • America is a nation of cowards and fools.

          You run your wars from dingy rooms with screens while you murder civilians in 8 countries by dropping 121 drone bombs a day. It doesn’t get more cowardly than that.

          You think people on the other side will work for you “just because” you’re America.

          You really think China’s going to suck it up and bow down to you – it doesn’t get stupider than that.

    • Sinbad2

      “All right, then we are imposing $400 billion tariffs more on China´s goods”

      Who do you think pays that tax?

      It’s levied in the US, so it’s Americans who will have to pay that $400 billion.
      And before you say, we will buy from another country, think about how long it will take say Vietnam to build the factories and train the staff?

      Inflation is about to skyrocket in the US, which will cause massive interest rate increases, which will increase US debt, and force interest rates even higher.

      The USA is a dead man walking, and Americans just don’t want to see reality.

    • What do think China will do then?
      Empty those warehouses and dump dollars on the market?

      What will you do then?

  • alejoeisabel

    Remember, the “free trade” agreement with China includes lending to the United States China’s trade surplus. Once there is no trade surplus with China, who will finance our budget? Who will finance our pending wars? Who will finance the Trump tax cuts to the wealthy?

    • The American consumer.

    • cortisol

      Once local US surpluses run out in more and more countries and USD loses more trade share, it will have no choice but to start a war or risk a shrinking economy and declining military, at which point it will be too late and impossible to start a war.

  • putinbeater

    nothing serious happened

  • Sinbad2

    The US sanctions on China over buying Russian weapons is a game changer.
    China will not accept the USA treating it like a disobedient colony.

  • That’s the way the US works and has always worked…. you give ’em an inch – and they bite off your arm.