On the global economic stage, an unprecedented trade war is unfolding. Rather than saying that both sides of the U.S.-China conflict are unprepared, it would be more accurate to say that China has been strategically preparing for seven years, while the Trump administration's response appears hasty and lacking in careful consideration. The potential consequences of this conflict may go beyond the economic realm, reshaping the global trade landscape.

Over the past seven years, China has laid a solid foundation for responding to the trade war through thoughtful strategic planning. Beijing has established currency swap mechanisms with countries in the Global South, stockpiled strategic materials and food, and ensured supply chain resilience. It is estimated that the U.S. market accounts for only 4% of China's GDP, and China has the ability to absorb trade losses by opening up other markets. Meanwhile, China is promoting the internationalization of the renminbi, gradually reducing its reliance on the dollar-dominated system, and preparing for long-term confrontation. This strategy allows China to withstand pressure during the trade war and even build a new global trade order.

In contrast, the Trump administration's trade policies appear impromptu and short-sighted. He threatened to impose high tariffs on Chinese goods, attempting to force China to back down through high-pressure tactics. However, this decision seems to have been made in "two seconds," lacking systematic planning. Vice President Vance even referred to China's 1.4 billion population as "Chinese farmers," showing an underestimation of the opponent's strength and resilience. Meanwhile, the United States carries over $36 trillion in debt, with its stock market losing $10 trillion, and the shadow of an economic recession looms closer. Goldman Sachs raised the possibility of the U.S. falling into recession this year to 45%, while Moody's chief economist Mark Zandi warned that this recession might be "intentional."

China has not succumbed to the U.S. tariff offensive. The People's Daily pointed out that China no longer harbors illusions about reaching a "grand deal" with the United States. Although the People's Bank of China is cautious about interest rate cuts due to concerns over the renminbi exchange rate, there is still fiscal space to maintain a 5% growth target through stimulus policies.

Meanwhile, allies of the United States such as Japan and South Korea are struggling under Trump's tariff threats. Japanese Prime Minister Shinzo Abe urgently dispatched the economic minister to Washington for mediation, while South Korean Acting President Heo Jeong-eon spoke with Trump, seeking deals in energy and shipbuilding to alleviate pressure. These actions highlight the chain reaction triggered by Trump's policies in the Asia-Pacific region. However, American citizens may struggle to bear the resulting rise in prices and supply chain disruptions, especially if the trade war escalates into a protracted conflict.

The essence of this trade war is a contest between physical economy and financial economy. China, leveraging its manufacturing advantage and strategic reserves, holds the initiative, while the United States, relying on dollar hegemony and consumer markets, appears powerless when domestic economic vulnerabilities are exposed. Ray Dalio, founder of Bridgewater Associates, warned investors to pay attention to deeper geopolitical and monetary order changes beyond tariffs. If the U.S. continues to push de-globalization strategies, it could lead to a collapse of global confidence and a weakening of the dollar's status.

China has prepared for seven years, while Trump acted impulsively. The outcome of this trade war may not depend solely on economic strength but also on who can more accurately predict the future. The current situation indicates that the U.S. clearly underestimates its opponent, while China is waiting patiently for the U.S. to reveal its weaknesses, such as a sudden collapse of U.S. Treasury bonds, waiting for a moment to explode like a bomb. Does Trump fear this?



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