COLD WAR II: With or without trade war deal, disputes between China and US set to intensify, says Beijing commentator.

As part of China’s reform and opening up initiative, the state had generally retreated from the market and economy in the period from 1978 to 2008, But since then, the state has made a comeback and altered the direction of China’s economic underpinnings.

China’s political and economic elites observed the global financial crisis in 2008 and concluded that China’s model of government intervention and state-owned economy system might be superior to the Washington-led western model of free enterprise. In other words, Beijing’s confidence in the so-called China model reached its peak.

It’s interesting that Beijing thinks that what happened in 2007-08 was due to an excess of capitalism, rather than the near-inevitable result of heavy-handed government tinkering with banking and currency, the finance markets, and home-ownership.

Which leads to this:

So when the US raised the issue of structural reform in the current trade talks – essentially asking China to give up the state’s grip on capital, business and technology – Beijing found it very hard to swallow.

I wish we’d take our own advice.