"We Could Cut Off The Whole Relationship" - War Of Words Between Trump And Beijing Is Heating Up
By Tyler Durden, Zerohedge
(Excerpts)
A solid chunk of President Trump's latest sit-down interview with one of his favorite reporters - the OG "money honey" Maria Bartiromo - was devoted to the president's latest belligerent musings about China, the latest in an escalating tit for tat as at least one hedge fund titan subtly warns that 'World War III' between the US and China might be a tail-risk worth hedging against.

Asked about the US-China bilateral relationship, Trump replied "we could cut off the whole relationship," saying the US "could save $500 billion" by doing so. For those who don't understand the significance of this last remark, it's a reference to cancelling some of the massive pile of Treasury debt held by China. Rates have continued to drop even as China has dumped a large chunk of its US foreign-exchange holdings, which has prompted some economist know-it-alls to insist that the Fed could simply soak up the entire slug of debt held by China, dismissing the risk of a destabilizing spike in interest rates.

"There are many things we could do," Trump said, "we could cut off the whole relationship." explaining that if that happened "[US would] save USD 500bln if you cut off the whole relationship. At what point - and I said this for years...and I said it about other countries also. Nato, I was able to get them to pay hundreds of billions more. You know who is my biggest fan in the world? Secretary Stoltenberg [the head of NATO]."
But with China, unfortunately, "you can't have an even deal"...seeming to suggest once again that the "Phase 1" trade deal is as good as dead,..
Schmidt probably winced when the president declared to Bartiromo that the "era of globalization" is over.

But as far as we can tell, there are some obvious errors in Schmidt's reasoning, most glaringly this: The Communist Party has no interest in allowing any American multinationals to take a dominant position in China, and - what's more - the party is willing to guarantee that this won't happen by adopting policies that disadvantage foreign competitors while subsidizing Chinese state-backed companies. While Beijing under Xi has made a few token gestures toward "liberalization", it's clear that the president's authoritarian bent has already moved China in the opposite direction, more aligned with the hardliners in the party who have been suspicious of the US since the 1970s, and whose suspicion, bitterness and contempt only intensified after the fall of the Soviet Union.
More at source:

https://www.zerohedge.com/geopolitical/we-could-cut-whole-relationship-war-words-between-trump-and-beijing-heating