US-China trade frictions could grow much worse - Nomura

Analysts at Nomura argued that US-China trade frictions could grow much worse.

Key Quotes:

"US-China trade frictions could grow much worse, however. I recently had the opportunity to speak in New York with a former senior official in the Obama administration.

"This individual said that even people in the Democratic Party who had previously come to China’s defense were now starting to question their stance. This group of China-friendly officials includes those who worked to bring the country into the WTO during the Clinton administration.

Their efforts were driven by the idealistic expectation that as economic growth brought more prosperity, the Chinese would eventually follow the west in embracing democracy and human rights. Yet despite having achieved tremendous economic growth since joining the WTO, China is now moving in the opposite direction."

"Not only is it trying to occupy the South China Sea, but it has eliminated term limits on the presidency, imprisoned human rights lawyers, restricted the freedom of the press, and is trying to place private companies under Communist Party control. Such actions raise the question of whether it was a mistake to allow China into the WTO and support its economic growth."

"This sentiment, coupled with the Trump administration’s long-held antagonism towards the country, is bolstering support for the view that China represents a threat to the US and needs to be closely watched."