Xi Jinping and the US President-elect Donald Trump had a telephone conversation.  According to the Chinese media, President Xi talked tough, while Trump seemed to be submissive.  However, we are all familiar with the Communist regime's habit of boasting and deceiving propaganda.

From Xi Jinping emphasizing his threat to Trump about the very importance of the cooperation between the two countries and that "cooperation is the only correct choice" and not wanting to undermine the existing cooperative relations, it illustrates that he is very nervous and takes seriously Trump's campaign promises: to take back job opportunities from China; to ask China to open up its market; and even to fight a trade war.  This time I think Xi Jinping's judgment is relatively to the point -- it is time to seriously deal with a trade war.

Since President Bill Clinton opened the unfair trade between China and the United States, the US trade deficit with China has gradually increased from 60 billion US dollars a year to 360 billion dollars a year.  Use of cheap labor forced US companies to transfer technology and to relocate factories, with a direct result of the loss of millions jobs in the USA, rising unemployment and decline of income of the wage earners in the USA.

These are the root causes of Trump to get more support during this presidential campaign.  That Xi Jinping did not listen to the nonsense analysis by the scholars in China who only know how to brown their noses, illustrates that he was not that silly.  As the main economic adviser of the Trump team responded to the reporters, on this issue Trump will definitely do what he said.  Xi Jinping solemnly warned Trump about this, and also rapidly reduced the RMB exchange rate to the US dollars, indicating that the trade war has already been kicked off.

Many Chinese believe that the United States does not dare to fight a trade war with China because of more than one trillion dollars held in US debt, which would result in the collapse of the US economy when they are all sold off.  Many Americans also agree with this view due to the misguidance of the US media.

But the HSBC has just analyzed and measured that action will only result in a depreciation of the dollar and the appreciation of the Chinese currency RMB (RenMinBi), which is conducive to the United States to increase its exports and reduce its imports.  Since this is the result the United States wishes but has been unable to get, which is even better than lowering interest rates, so why not?

Further, the Treasury securities are traded regularly.  Regardless who buys and who sells them cannot really affect the real economy.  The government plans of buying back some at a lower price in fact could earn some money to fill its fiscal deficit.  This is of great benefit to the United States.  If I were the US Treasury Secretary, I would go to Beijing and happily ask Xi Jinping to have a big sale of US debt.

After selling its US Treasury bonds, China would have to convert the cash into other hard currency, or the Chinese currency RMB.  That conversion will result in the appreciation of other hard currency and the RMB.  Imports will increase while exports decrease, in the terms of the US dollars.  This is detrimental to the exports and imports of all countries beside the United States, and beneficial to US imports and exports, which can drastically reduce the US trade deficit.  If Trump can realize his promise so soon, he should blow Xi Jinping a kiss to thank him.

Besides this phantom of the threat manufactured by the Wall Street, what other means does China have to fight this trade war with Trump?  None.  In the area of high-tech and high value-added products, China has no advantage but the cheap labor.  And the labor cost is the main part that Trump with strike at, so the score will be greatly beneficial to the Trump team and not conducive to Xi Jinping's team.  We could see the clues from Xi Jinping quickly taking action to reduce the RMB exchange rate, which once again illustrates that Xi Jinping is not stupid.

But Xi Jinping is indeed stupid enough: as others were still debating whether China should be identified as a currency manipulator or not, he timely provides conclusive evidence to them.  Not according to changes in the market, but due to the government's order to devalue the RMB, is not this the manipulation of the exchange rate?  This round of the fight will be one Xi Jinping lost for sure.

In the past, the reason that the United States did not dare to launch a trade war with China despite such an advantage, is because China should be thankful to their big brothers on Wall Street, and their scholars and lobbies they paid for.  Now these people are the object of hate by the American people, and they care more of their own survival.  Trump's team is in line with the wishes of the people; thus he won this presidential election, so the possibility of his acting contrary to the main promise of this election is small.

More, Trump himself is very rich.  His campaign was not for economic benefits, but as a real idealist.  So one hopes he is a person who wants to do some great things for the USA, instead of been bought with the interests from the Wall Street.  The continued means of China buying out the US politicians to promote its own unreasonable interests has become impracticable.  So now it is time to return to the state of working solidly, instead of boasting and threatening.

To be considerate of Xi Jinping, and more to be considerate of the Chinese people, Xi Jinping should only use a pragmatic attitude to deal with Trump, and pragmatically ease or even stop the trade war with the United States.  It would be childish if he thinks that correcting Trump's trademark lawsuit in China will be enough.  Will this change Trump's attitude even one percent?  The people in Beijing's phrase would be: are you cursing me?  It would result in the accusation of Trump as abusing power for personal gain.  So it is better not to play this kind of children's game.

To make peace in that lawsuit that surely would be lost, you should know what the other wants.  Giving out small favors to make up a delay, is also a tact.  But will the others be so stupid?  What the others wants is a change of the pattern of Sino-US trade, or changes in China's political and economic system, including changes in the legal system.

To put it simply is to treat law seriously, open the Chinese market to the United States, and to implement laws that open up the freedom of association and freedom of speech to the Chinese people.  We want to allow the Chinese people to have freedom of association for workers' unions to make collective bargaining to raise working-class incomes, to expand China's domestic market, and to expand the US market in China, meanwhile reducing unfair competition among the US enterprises.  For both the United States and China, it will be a win-win situation.  Why not?

But the process will certainly not be smooth.  China's monopoly of large enterprises, and the US firms that make money in China will certainly lobby the Chinese and American politicians to block the emergence of this win-win situation.  In the United States they have little hope of success, in China they have little likeliness of failure.  That is because Xi Jinping is not as strong as he boasted; corrupt officials within the Communist regime are looking for reasons to get rid of him.  I estimate that the future will be a mess, which will have a negative impact on the global economy.

Xi Jinping and the US President-elect Donald Trump had a telephone conversation.  According to the Chinese media, President Xi talked tough, while Trump seemed to be submissive.  However, we are all familiar with the Communist regime's habit of boasting and deceiving propaganda.

From Xi Jinping emphasizing his threat to Trump about the very importance of the cooperation between the two countries and that "cooperation is the only correct choice" and not wanting to undermine the existing cooperative relations, it illustrates that he is very nervous and takes seriously Trump's campaign promises: to take back job opportunities from China; to ask China to open up its market; and even to fight a trade war.  This time I think Xi Jinping's judgment is relatively to the point -- it is time to seriously deal with a trade war.

Since President Bill Clinton opened the unfair trade between China and the United States, the US trade deficit with China has gradually increased from 60 billion US dollars a year to 360 billion dollars a year.  Use of cheap labor forced US companies to transfer technology and to relocate factories, with a direct result of the loss of millions jobs in the USA, rising unemployment and decline of income of the wage earners in the USA.

These are the root causes of Trump to get more support during this presidential campaign.  That Xi Jinping did not listen to the nonsense analysis by the scholars in China who only know how to brown their noses, illustrates that he was not that silly.  As the main economic adviser of the Trump team responded to the reporters, on this issue Trump will definitely do what he said.  Xi Jinping solemnly warned Trump about this, and also rapidly reduced the RMB exchange rate to the US dollars, indicating that the trade war has already been kicked off.

Many Chinese believe that the United States does not dare to fight a trade war with China because of more than one trillion dollars held in US debt, which would result in the collapse of the US economy when they are all sold off.  Many Americans also agree with this view due to the misguidance of the US media.

But the HSBC has just analyzed and measured that action will only result in a depreciation of the dollar and the appreciation of the Chinese currency RMB (RenMinBi), which is conducive to the United States to increase its exports and reduce its imports.  Since this is the result the United States wishes but has been unable to get, which is even better than lowering interest rates, so why not?

Further, the Treasury securities are traded regularly.  Regardless who buys and who sells them cannot really affect the real economy.  The government plans of buying back some at a lower price in fact could earn some money to fill its fiscal deficit.  This is of great benefit to the United States.  If I were the US Treasury Secretary, I would go to Beijing and happily ask Xi Jinping to have a big sale of US debt.

After selling its US Treasury bonds, China would have to convert the cash into other hard currency, or the Chinese currency RMB.  That conversion will result in the appreciation of other hard currency and the RMB.  Imports will increase while exports decrease, in the terms of the US dollars.  This is detrimental to the exports and imports of all countries beside the United States, and beneficial to US imports and exports, which can drastically reduce the US trade deficit.  If Trump can realize his promise so soon, he should blow Xi Jinping a kiss to thank him.

Besides this phantom of the threat manufactured by the Wall Street, what other means does China have to fight this trade war with Trump?  None.  In the area of high-tech and high value-added products, China has no advantage but the cheap labor.  And the labor cost is the main part that Trump with strike at, so the score will be greatly beneficial to the Trump team and not conducive to Xi Jinping's team.  We could see the clues from Xi Jinping quickly taking action to reduce the RMB exchange rate, which once again illustrates that Xi Jinping is not stupid.

But Xi Jinping is indeed stupid enough: as others were still debating whether China should be identified as a currency manipulator or not, he timely provides conclusive evidence to them.  Not according to changes in the market, but due to the government's order to devalue the RMB, is not this the manipulation of the exchange rate?  This round of the fight will be one Xi Jinping lost for sure.

In the past, the reason that the United States did not dare to launch a trade war with China despite such an advantage, is because China should be thankful to their big brothers on Wall Street, and their scholars and lobbies they paid for.  Now these people are the object of hate by the American people, and they care more of their own survival.  Trump's team is in line with the wishes of the people; thus he won this presidential election, so the possibility of his acting contrary to the main promise of this election is small.

More, Trump himself is very rich.  His campaign was not for economic benefits, but as a real idealist.  So one hopes he is a person who wants to do some great things for the USA, instead of been bought with the interests from the Wall Street.  The continued means of China buying out the US politicians to promote its own unreasonable interests has become impracticable.  So now it is time to return to the state of working solidly, instead of boasting and threatening.

To be considerate of Xi Jinping, and more to be considerate of the Chinese people, Xi Jinping should only use a pragmatic attitude to deal with Trump, and pragmatically ease or even stop the trade war with the United States.  It would be childish if he thinks that correcting Trump's trademark lawsuit in China will be enough.  Will this change Trump's attitude even one percent?  The people in Beijing's phrase would be: are you cursing me?  It would result in the accusation of Trump as abusing power for personal gain.  So it is better not to play this kind of children's game.

To make peace in that lawsuit that surely would be lost, you should know what the other wants.  Giving out small favors to make up a delay, is also a tact.  But will the others be so stupid?  What the others wants is a change of the pattern of Sino-US trade, or changes in China's political and economic system, including changes in the legal system.

To put it simply is to treat law seriously, open the Chinese market to the United States, and to implement laws that open up the freedom of association and freedom of speech to the Chinese people.  We want to allow the Chinese people to have freedom of association for workers' unions to make collective bargaining to raise working-class incomes, to expand China's domestic market, and to expand the US market in China, meanwhile reducing unfair competition among the US enterprises.  For both the United States and China, it will be a win-win situation.  Why not?

But the process will certainly not be smooth.  China's monopoly of large enterprises, and the US firms that make money in China will certainly lobby the Chinese and American politicians to block the emergence of this win-win situation.  In the United States they have little hope of success, in China they have little likeliness of failure.  That is because Xi Jinping is not as strong as he boasted; corrupt officials within the Communist regime are looking for reasons to get rid of him.  I estimate that the future will be a mess, which will have a negative impact on the global economy.