A Red Carpet Down the Wrong Road
If I didn’t know better, I’d think Trump was setting a brilliant trap for Xi Jinping: shower him with so much praise that he feels encouraged to keep wrecking China’s economy.
After Trump’s retreat from the tariff war, this extravagant reception could reinforce Xi’s conviction that he has been right all along. Why else would Trump back down and now show me such respect?
Xi is steering China towards more production and exports, weaker household consumption, and deeper imbalances. Advanced manufacturing generates impressive output but fewer jobs per unit of production, while falling property prices and weak incomes keep consumption depressed.
Beijing’s answer? Build more infrastructure. Its “six networks”—water, power, computing, communications, underground utilities and logistics—are being accelerated to keep its economy on track. Reported estimates put investment in these and related areas are budgeted at roughly 26 trillion yuan (US$3.9 trillion) during 2026–2030, including around 7 trillion yuan (US$1.04 trillion) this year alone. As if China didn’t already have enough underused infrastructure. 🥳
That can get banks lending and GDP moving again. But it perpetuates the same investment dependence that China needs to escape. More money flows into construction and productive capacity while household purchasing power weakens.
The result is a country increasingly capable of making things its own people cannot afford to buy—and increasingly dependent on foreigners to absorb the surplus.
Trump’s applause could help Xi mistake diplomatic recognition for economic vindication.
Trump doesn’t need to build the trap. Xi is building it himself. He just needs a little more encouragement from the White House.
Red carpet rolled out for Xi as his plane touches down in US — Trump to greet him personally