You don’t have to be an expert, you just need to read newspapers regularly.

China discovered already in 2016–20 that USA could change its attitude drastically on a whim. They designed their economy to not be taken by surprise.

So they have built in resilience. And they have prepared counter-measures. Surely you realize why Musk is so strongly against the trade war? He has just been locked out from Chinese rare earth elements, that’s why. The Chinese sits on a huge portion of the raw materials needed to build EVs and solar panels and microchips and, for that matter, F35s, and they just enacted export controls – they call it “licensing” or something, but the bottom line is, Teslas can’t be built in the USA anymore, and they’ll probably stop supplies to the Tesla factory in Germany, provided the Germans still lets it operate despite the environmental disaster it’s proving to be.

And that’s just one obvious example. Vietnam was USA’s partner in the region to contain Chinese expansionism; Vietnam had even specialised in supplying USA with things they needed – and out of nowhere, USA decided that this supply was somehow “unfair”, slapped unilateral tariffs on Vietnam, and guess who’s going to buy all that stuff now even if they lose money on the deal? China, that’s who. The tariffs just handed Vietnam to China.

There’s a lot of that sort of thing going on right now. The Chinese leadership might be many things, but “stupid” is not one of them.

They were prepared.

And at the same time, it’s obvious that the US tariff regime was slapped together in an afternoon by people who had no clue what they were doing.

Of course the Chinese are totally confident. They were prepared, they know that the USA wasn’t.

I’m no financial/economic expert. But it doesn’t take a genius to figure out why.

Some of the basic logic are:

1. The US launched this war, China is defending itself. Like in Vietnam and Afghanistan, it’s much easier for the defenders to stick together and fight on, while it’s just a matter of time when public opinions turn against the attacker at home.

2. Chinese can take a lot more beating than the regular Americans. Just in the 20th century alone, the poor Chinese have weathered through 5 great famines, 14 years of brutal Japanese invasion and occupation, 2 US-led coalition attacks, being pointed by the nuclear arsenal of both the US and USSR, the collapse of 4 national regimes… And China emerged just fine. Some economic pain is nothing to the Chinese, in relative terms.

3. The Chinese political system is a lot more resiliant. The American government is held responsible by the public opinion at the midterm in 2026 and general election in 2028. People will complain and hurt it in the elections, when they feel the economic pain from the trade war. The Chinese government doesn’t face such a problem.

4. Chinese exposure to the US is a lot less than in 2018. This isn’t the first time Trump launched a trade war on China. Sectors in the Chinese economy that would be most affected by a trade war with the US have already went bankrupt or diversified. And the export to the US, which would be subject to US tariffs on China, is now only 2.5% of China’s GDP. It’s well within China’s fiscal ability to compensate for that.

5. Also China has been fighting this war since 2018. It has gotten used to it. It has stockpiled a huge arsenal of policy weapons which it will slowly release as when it sees fit. It’s not the China of 2018 any more. If the weaker China didn’t collapse or cave in back then, there’s really no reason to believe that the stronger China would fare any worse this time.