The fact that China will lose the trade war with the U.S. was always a forgone conclusion. The reasons are obvious. Foreign trade is a much larger percentage of Chinese GDP than it is for the U.S., so a trade war was always bound to have more impact on China than the U.S. Also, China only buys about $150 billion of goods from the U.S. each year while the U.S. buys about $500 billion from China. That’s the source of the $350 billion trade deficit. This means that if China tries to match the U.S. in tariffs dollar for dollar, they run out of headroom at $150 billion while the U.S. can keep going up to $500 billion and inflict far more pain on China. Other forms of Chinese retaliation are mostly nonstarters. They cannot dump U.S. Treasuries without hurting their own reserve position and risking an account freeze by the U.S. China cannot turn up the pressure by stealing intellectual property because they’re already doing that to the greatest extent possible. The bottom line is that the U.S. will win the trade war and either China will open its markets and buy more U.S. goods or the Chinese economy will slow significantly. Still, this article suggests that the Chinese may not care. The Chinese leadership care first and foremost about their own leadership and the perpetuation of the Chinese Communist Party rather than the growth or welfare of their people. If the Chinese view the trade war as just one step in a protracted cold war involving trade, electronics, military assets and regional hegemony, then we’re in for a long period of contracting growth that will not be confined to China but will affect the entire world. That seems the most likely outcome for now. Get set for slower growth and perhaps stagflation. It could be like the late 1970s all over again. Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.