China the big loser in trade war with Trump

Thomas Lifson:

President Trump took a brilliant, gutsy step in confronting China over its parasitic trade strategy, and the signs today are unmistakable that he made the right call.

Consider two developments in the last few days.

China's principal stock market in Shanghai has closed out 2018 with the world's worst decline. The South China Morning Post in Hong Kong reports:

Shanghai's stock benchmark ended 2018 as the world's worst market performer for a second year, falling 24.6 per cent over 12 months as an unprecedented trade war between China and the United States weighed on the Chinese economy and crimped corporate earnings.

The city's key stock index closed the year at 2,493.90, while the benchmark on the smaller Shenzhen bourse fell 33.2 per cent during the period to 1,267.87. The combined capitalisation of the two exchanges fell by US$2.4 trillion to 43.3 trillion yuan (US$6.3 trillion) during the year, overtaken by Tokyo as Asia's largest equity market.

"The stock market is often the barometer of a nation's economic health, and the weakness in China's A-share market reflects the serious troubles in the Chinese economy," said Li Wenhui, an analyst for Huatai United Securities.

Don Surber looks at this data and concludes:

Chairman Xi's refusal to compromise with President Trump has cost his country $2.4 trillion so far in 2018.

That's enough to build 96 Mexican walls.

In fact, that's six times the American trade deficit. In short, for every $1 in profit Red China took in trading with the USA, it lost $6 in its net worth.

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There is more.

This also explains why China is willing to reduce some of its protectionist policies including tariffs.  It looks like China is willing to enter into a new trade agreement with the US on terms that are much more favorable than its policies before Trump.   It is interesting how something as capitalistic as a stock market could get the attention of China's communist leaders.