China Doubles Down on ‘Covid Zero’ Despite Economic Toll
A man wearing a protective suit, who has tested positive for the novel coronavirus, walks in front of the French Embassy in Beijing on Dec. 14.
Shu Zhang / AP
China’s president and premier have issued a formal challenge to the United States, saying if the U.S. government tries to impose trade and transportation barriers, they will have to respond in kind.
That seems to be the extent of any response the Trump administration is now willing to make, as it continues to pursue measures that will effectively double down on a strategy of “covid zero.” But we now know the extent of how that plan is also accelerating China’s economic downward spiral.
The latest economic indicator to be thrown into sharp relief is the fact that the cumulative cost of the trade war has reached a record $6.5 trillion in economic losses through February.
In other words, a trade war that began at $100 billion in tariffs in the first week of January now has reached its total economic cost in just 10 weeks. So far, the U.S. has been unable to reach a deal with Beijing over its alleged manipulation of its economy and stealing intellectual property, despite evidence to the contrary.
According to the International Monetary Fund, China will run a cumulative trade deficit of $12.3 trillion in 2021 as it imports more than it exports, and is now on track to hit $20 trillion by the year’s end.
“China is rapidly becoming the largest economy of the world with the largest cumulative trade deficits,” said Brett Biggs, chief economist at Bloomberg.
That means that over the course of roughly three years, the U.S. will be forced to borrow a record amount of money and borrow many more years to repay the enormous amount of debt China has accumulated thanks to its massive trade surpluses.