The Chinese economy will shrink. The trade war has no end in sight.

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Remember early in 2019 when you thought …mehthis trade war will end in a few months. You can not win a trade war! President Trump will understand that and return to his senses.

False.

Maybe you can not win a trade war. There will be a decoupling pain. But the decoupling is in progress. Just look at what the Pentagon and the Defense Department think of China during this year's threat assessment and you already know where it's going Maybe even Joe Biden can not save China now.

See: A big mistake Chinese elites make war on trade war – Forbes

For some, the trade war is a "loser-loser" situation. It has already damaged relations between the two countries. "The quarrel has not only precipitated the economic decoupling of the United States and China, but has also pushed the global bilateral relationship to its lowest point in half a century," writes Professor Xiangfeng Yang in a revised academic article. last week by Forbes donor Panos Mourdoukoutas.

This is the decoupling of the world's No. 1 and No. 2 economies that makes the Chinese seem nervous and pessimistic about future relations between Washington and Beijing, even if a trade agreement is reached. & Nbsp; "Any deal will only be a temporary stop in a long-running economic war," Yang adds.

It is also the feeling that prevails in the markets.

"The ceasefires will be definitely temporary," said Daniel Ahn, former head of President Obama's state department and now chief economist at BNP Paribas in New York.

It forecasts growth below 6% in China this year and next year. This is the number of psychological growth set by Beijing. A number less than six means that central planners are wrong.

China has increased by 5.9% this year and 5.6% next year. Other banks, such as Nomura and Barclays, see China grow between 5% and 5.5% in 2020.

"We tell our customers that whatever Trump's reelection is, the underlying tensions between the United States and China will not go away. Rhetoric may change, or tactics may change, but decoupling is already under way. It's a "deep state" phenomenon, "he said, half-laughing.

BNP has the weakened Chinese yuan at 7.35. It is currently trading at 7.11.

Earlier this week, famous short-selling currency dealer George Soros congratulated Trump in an editorial at WSJ for his trade war with China. Naturally. Soros has bypassed the yuan without success for a year. Now that he is over 7, he earns money. If the BNP call on the yuan is right, Soros will do even more.

Rumors about China's street dumping its holdings of treasury bonds are part of its retaliatory measures in the trade war are greatly exaggerated. China has more than $ 3 trillion in central bank reserves. Most of it is in the Treasurys. There is no other asset on the market that has liquidity and a Treasury size return. Not in Europe Not in Japan Australia and Canada are too small. "They need to diversify from the Treasurys and they are, but the weapon endowment of their assets, I think, is exaggerated," says Ahn.

The last variable of the trade war is the political unrest in Hong Kong. The policy of one country, two systems of China is threatened as tens of thousands of protesters claim a more independent Hong Kong.

An unprepossessing White House could act against China if protests continued until 2021. The workings are already underway, with at least two bills drafted by Senator Marco Rubio, and the following: others by both parties, ready to strip Hong Kong of its special trade status with the United States

On the technology front, Washington seems to want to make life more difficult for Chinese investors, especially companies that invest in new technologies, whether in life sciences, financial services or defense-related technologies .

Until now, US companies have told China's US Trade Council that they do not want to leave China. This year, only 3% of survey respondents said they would consider moving to the United States and less than 10% indicated that they were sourcing elsewhere because of tariffs.

The two companies are not aligned on the idea of ​​the market of a protracted trade war, with permanent tariffs, or the profit margin for Chinese products is so large that they can afford a reduced profit margin.

This could change everything after the new rates that came into effect on September 1, after completion of the survey. A new dose of tariffs will hit consumer goods on December 15.

In the meantime, Washington's goal seems to be to make investment in China as risky as an investment in Mexico or India. When that happens, China will be just another market. important and perhaps even highly desirable. But for many manufactured products, it will not be the only one.

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Remember early in 2019 when you thought …mehthis trade war will end in a few months. You can not win a trade war! President Trump will understand that and return to his senses.

False.

Maybe you can not win a trade war. There will be a decoupling pain. But the decoupling is in progress. Just look at what the Pentagon and the Defense Department think of China when assessing the threat in this year's world and you already know where it's going Even Joe Biden may not be able to save the China now.

See: A big mistake Chinese elites make war on trade war – Forbes

For some, the trade war is a "loser-loser" situation. It has already damaged relations between the two countries. "The quarrel has not only precipitated the economic decoupling of the United States and China, but has also pushed the global bilateral relationship to its lowest point in half a century," writes Professor Xiangfeng Yang in a revised academic article. last week by Forbes contributor Panos Mourdoukoutas.

It is this decoupling of world economies No. 1 and No. 2 that makes the Chinese seem nervous and pessimistic about future relations between Washington and Beijing, even if a trade agreement is reached. "Any agreement will be only a temporary ceasefire in the context of a long-lasting economic war," Yang adds.

It is also the feeling that prevails in the markets.

"The ceasefires will be definitely temporary," said Daniel Ahn, former head of President Obama's state department and now chief economist at BNP Paribas in New York.

It forecasts growth below 6% in China this year and next year. This is the number of psychological growth set by Beijing. A number less than six means that central planners are wrong.

China has increased by 5.9% this year and 5.6% next year. Other banks, such as Nomura and Barclays, see China grow between 5% and 5.5% in 2020.

"We tell our customers that whatever Trump's reelection is, the underlying tensions between the United States and China will not go away. Rhetoric may change, or tactics may change, but decoupling is already under way. It's a "deep state" phenomenon, "he said, half-laughing.

BNP has the weakened Chinese yuan at 7.35. It is currently trading at 7.11.

Earlier this week, famous short-selling currency dealer George Soros congratulated Trump in an editorial at WSJ for his trade war with China. Naturally. Soros has bypassed the yuan without success for a year. Now that he is over 7, he earns money. If the BNP call on the yuan is right, Soros will do even more.

Rumors about China's street dumping its holdings of treasury bonds are part of its retaliatory measures in the trade war are greatly exaggerated. China has more than $ 3 trillion in central bank reserves. Most of it is in the Treasurys. There is no other asset on the market that has liquidity and a Treasury size return. Not in Europe Not in Japan Australia and Canada are too small. "They need to diversify from the Treasurys and they are, but the weapon endowment of their assets, I think, is exaggerated," says Ahn.

The last variable of the trade war is the political unrest in Hong Kong. The policy of one country, two systems of China is threatened as tens of thousands of protesters claim a more independent Hong Kong.

An unprepossessing White House could act against China if protests continued until 2021. The workings are already underway, with at least two bills drafted by Senator Marco Rubio, and the following: others by both parties, ready to strip Hong Kong of its special trade status with the United States

On the technology front, Washington seems to want to make life more difficult for Chinese investors, especially companies that invest in new technologies, whether in life sciences, financial services or defense-related technologies .

Until now, US companies have told China's US Trade Council that they do not want to leave China. This year, only 3% of survey respondents said they would consider moving to the United States and less than 10% indicated that they were sourcing elsewhere because of tariffs.

The two companies are not aligned on the idea of ​​the market of a protracted trade war, with permanent tariffs, or the profit margin for Chinese products is so large that they can afford a reduced profit margin.

This could change everything after the new rates that came into effect on September 1, after completion of the survey. A new dose of tariffs will hit consumer goods on December 15.

In the meantime, Washington's goal seems to be to make investment in China as risky as an investment in Mexico or India. When that happens, China will be just another market. important and perhaps even highly desirable. But for many manufactured products, it will not be the only one.