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What does China think of the midterm outcome?

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What does China think of the midterm outcome?


This week’s events in the United States have been followed closely in Beijing, where the leadership is certainly not familiar with midterm elections challenging its policy. To discuss the Chinese reaction euronews spoke to the author and analyst Robert Lawrence Kuhn.

“Mr Kuhn, with the Congress now in Republican hands will Beijing fear a more nationalistic trade policy from Washington?

Robert Lawrence Kuhn: “Leaders in China have long learnt that they will be the scapegoat in an American election, so they look past that and recognise that once the new administration is in power things will go back to where they always have been. But you know this time they may be wrong. This time there may be a difference and here’s why.

“If you look at the China policy in both the Democratic party and the Republican party, there are more differences within each party then between the parties. I don’t know of a single other issue that has that characteristic.

But here’s the difference today; you have an electorate that has been expressing great anger, great frustration and it may be that an anti-China policy on trade, tariffs and other matters will become the one unifying factor.

“So whereas China says ‘well, it’s like it always has been’ I’m not so sanguine about it and I look at the situation very seriously.”

euronews: “Washington’s just introduced new so-called ‘money-printing’ measures to boost the economy, but that may further weaken the dollar. Will this increase the chances of an all-out currency war?”

Robert Lawrence Kuhn: “I would say slightly, because certainly some Chinese leaders have told me that China looks at the quantitative easing as a stealth devaluation of the American dollar, putting additional upward pressure on the Chinese currency, the yuan.

So I think there is great concern, but my thinking is that both countries are so dependent upon the relationship, and the economy of the world is so fragile, that wiser heads will prevail and we will have moves towards a trade war, but no real trade war.

(In response) what China will do is that it will apply a parallel remedy that is not higher, but is actually lower than what was done to them, so they won’t go above and they will signal – by applying a contravening tariff – that they want to damp down the problem. This had happened before and I expect it to happen again. So there will be moves (towards a currency war), but I think they will get less, over time.”

euronews: “How do you think China would have handled the sudden slowdown in recovery that’s provoked crisis in America?”

Robert Lawrence Kuhn: “I think we need to look at how China’s leaders think about this. Leaders tell me ‘how can you do a strategic plan for a country when you have gridlock in government, a divided government, as you now have in Washington’ – or what has happened in Japan where you have a turnover of prime ministers every three months or so – that’s an exaggeration, but it is the way it has happened. So the Chinese leaders say, that in order to handle long-term strategic planning in general, you need so much more a strong united government, which – to them – gives a new justification for maintaining the communist party as the ruling party.”

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