After the Brexit vote, mainland Chinese investors were hailed as U.K. real estate's dragon saviour. Now they have other things on their mind. China has imposed severe capital controls (over sums as little as $50,000) and is incentivising capital repatriation. In short, the Middle Kingdom is preparing for a potential US trade war.
The media are portraying Sino-US rivalry as a Cold War zero-sum game. But the world is more profoundly interconnected than ever before.
After the Great Financial Crisis, China's growth carried the crippled world economy. If there is a Sino-US trade war, China may lose under its fragile debt mountain. But so might America, when its toys, pants and iPhones jump in price.
Let us hope both sides reach a mutually beneficial compromise. Then Chinese capital can flow freely again and the US continue it growth path, each to the world economy's profound benefit. In a trade war, every punch hits both boxers. They should call the bout off.
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