Of course it’s afraid. But the Ultimate Crony Capitalist State also can’t broadcast publicly that it is afraid.
Consumers in China and the US should be weary if not afraid as a trade war takes hold also. Such a war will cost the everyday buyers of goods and services. The ripples of trade war also tend to emerge in unexpected places in the economy.
A prolonged trade war as the U.S. economy appears strong may lead to more investors pulling money out of China. Beijing is therefore taking pre-emptive steps to avoid massive outflows of investor money from its financial system, analysts said, adding that could deal another blow to its economy which is already experiencing slower growth.
China’s economy has had an amazing stretch of growth for three decades. But this growth was built on a deeply crony base. As such China has a fundamental fragility built into its economy. Sooner or later China will face serious economic challenges and when it does, and it might soon, the brittleness of the crony system may become obvious. We will see if China can adapt.