China is also Fighting a Trade War with Europe (and Winning)
Post by Brad W. Setser, Author
U.S. President Donald J. Trump has torn up the WTO’s rule book and unilaterally raised tariffs on almost everyone, including the EU.
The EU even agreed not to retaliate against a 15 percent across the board tariff hike in its deal with Trump, to the dismay of some.
And construction equipment. And industrial robots. And most specialty chemicals. And batteries, permanent magnets, solar PVs and their chemical precursors, industrial diamonds, wind turbines, and high-speed rail.
While China hasn’t quite mastered the production of top-line civil aircraft, Comac is ramping up the production of the C919. Plus, there are signs that the Chinese content of the made-in-China Airbus narrow bodies is rising.*
And, part because of competition among China's local levels of government, China often doesn't know when to stop investing -- as competing local governments add subsidized capacity in priority and non-priority sectors alike. That drives profits down -- and pushes firms to export capacity that China's domestic market cannot absorb.
