19
The U.S.-China
trade conflict con-
tinues to escalate.
When the most recent
round of talks pro-
duced no apparent
progress, President
Trump upped the ante by announcing
new tariffs on the $300 billion in Chinese
imports the U.S. hadn’t already taxed.
Beijing first responded by warning that it
would stop importing all U.S. agricultural
products. (China is one of the world’s
largest importers of these
products.) Then, on Aug. 5,
China raised the stakes again
by allowing traders to push
the value of its currency
below the psychological bar-
rier of 7 yuan to 1 U.S. dollar.
That move is designed to hurt
the U.S. economy by making
U.S. products more expensive
for Chinese consumers and
companies to buy, and to help
Chinese producers by mak-
ing Chinese products more
affordable in the U.S. In that
sense, it weakens the impact
of the Trump tariffs. The U.S. side then
hit back by officially branding China
a “currency manipulator.”
These moves don’t mean the U.S.-
China conflict is spiraling out of control.
Chinese policymakers know that currency
is a dangerous weapon. By raising prices
for Chinese consumers, a weaker Chinese
renminbi may further weaken an already
slowing Chinese economy. It increases
the debt for Chinese companies that have
borrowed money in U.S. dollars and other
currencies, and it makes it more expen-
sive to buy oil, which is generally priced
in dollars. It also encourages other gov-
ernments to dump renminbi that may be
losing their value, creating more financial-
market headaches for China, and could
encourage them to lower the value of their
own currencies in self-defense.
The U.S. move to brand China a cur-
rency manipulator is largely symbolic.
The 1988 Trade Act, which created this
designation, calls on the Treasury Depart-
ment to negotiate with the governments it
has accused, but it doesn’t automatically
impose tough penalties on them.
In announcing its decision, the depart-
ment said simply that Treasury Secretary
Steven Mnuchin “will engage with the In-
ternational Monetary Fund to eliminate
the unfair competitive advantage created
by China’s latest actions.” There are no
specific threats of further action to boost
his negotiating leverage. By Aug. 6, the
Chinese currency had moved back beyond
the 7-1 barrier, signaling that
China felt it had made its point
and didn’t intend to push fur-
ther for now.
Still, the ongoing escala-
tion should worry us. The two
sides continue to put weap-
ons on the table they don’t yet
intend to use. Both recognize
that firing any of them could
prove self- defeating and do a
lot of collateral damage, but
they don’t seem closer to re-
solving their broader differ-
ences. Meantime, the weap-
ons are now visible for all to
see, and until one side or the other finds
a mutually satisfying path toward peace,
it becomes harder not to use them.
As election year approaches in the
U.S., Beijing will target its actions at U.S.
voters that Trump needs. It may also feel
it can wait until after the election to see
whether there might be a new U.S. Presi-
dent, and if Chinese action targeted at
U.S. farmers helps with that process, so
much the better for Beijing. In response,
Trump has signaled that policy won’t
work: “our great American Farmers know
that China will not be able to hurt them
in that their President has stood with
them and done what no other president
would do,” Trump tweeted on Aug. 6.
He has incentives to prove he’s tough
on China and to avoid any action that
might look like retreat.
They say in politics, timing is every-
thing. That bodes ill for the next few
months of U.S.-China conflict. THE RISK REPORT
Choppy waters ahead for
the U.S.-China trade war
By Ian Bremmer
As election
year
approaches
in the U.S.,
Beijing will
target its
actions at
U.S. voters
that Trump
will needE DUC AT ION
Middle school
made tolerable
Middle school, as docu-
mented in such educational
opuses as Eighth Grade, is
awful. Students who have
done well in elementary
school often stumble,
become isolated and fall
behind. But Geoffrey Bor-
man, a professor at the
University of Wisconsin–
Madison who specializes in
education policy, thinks he
may have found an answer.
And it costs $1.35 a student.
Borman and his team
gave more than 600 Wiscon-
sin students two 15-minute
writing exercises, one at
the start of school and
one a month later, in which
they were asked to react
to a survey, with quotes
lifted loosely from former
students, about struggling in
the early months of school.
The idea was to suggest
that everyone felt a little
lost at first. The results were
encouraging.
“The students who
received our intervention
missed fewer days of
school, got sent to the
principal’s office less often
and got better grades,” says
Borman. “They had better
relationships with their
teachers and classmates,
were less anxious about
big tests and were more
motivated to do well in their
classes.” Even the Wimpy
Kid would be impressed.
ÑBelinda Luscombe