It’s pretty obvious that there can only be one winner. Surplus nations do not benefit from trade wars. They are the reason for them in the first place. China will lose.
But the important question for investors is how will it lose? President Trump has done a very nice job of wedging Xi Jinping now between strategic gains in North Korea and losses on trade. To my mind Beijing (and the US) are much better served by China quietly capitulating on trade so that it can take its North Korean win. Surely Beijing will see it that way too.
Damien Boey at Credit Suisse estimates the impact on China:
