Regarding negotiations, there are relatively large disputes within the party, but in the end it is very likely that they will refuse to make concessions.
When U.S. tariffs rise, related domestic industrial chains will be transferred to Taiwan and Southeast Asian countries in large numbers, which will cause employment problems for 100 million people. Unlike previous crises, this time we not only have to guard against the intensification of the housing market bubble, but also there is not so much infrastructure that can provide employment. On the other hand, in recent years, China's overcapacity problem has been solved mainly through exports, and the trade surplus is used to develop the domestic economy in order to achieve incredible economic growth. Now that the Trump administration imposes tariffs, this strategy will no longer work.
If it compromises in the negotiation, China will lose the opportunity of the Fourth Industrial Revolution that it finally took over, and its economy will be at the mercy of Japan and South Korea.
I think that under the premise of no compromise, there are three ways to break the game.
1. Wu Tong Taiwan
This depends on whether Taiwan’s general election next year can find a legitimate reason for military reunification. But it does help alleviate domestic social focus issues.
2. Housing market reform
It is very possible to turn the bubble crisis into capital for job creation.
3. Games
Transfer the surplus labor force in the society into the game industry to ease the formation of social conflicts.
In order to alleviate the intensity of the unemployment shock, the central bank will increase imports and exports by printing the renminbi to depreciate the renminbi, attracting other countries to supplement the vacancy of the withdrawal of US capital.