The Donkey of Guizhou
July 7, 2014·0 comments
Both sides of the trade war believe they hold the stronger position. American leadership sees leverage and advantage. Chinese leadership sees the same. This mutual confidence in a winning hand isn't a negotiating position. It's the setup for a collision.
- A 1,200-year-old fable governs how Beijing sees this conflict. The Donkey of Guizhou, known to every member of the Chinese Politburo, tells the story of a creature that looks powerful but can only do one thing. Once the tiger discovers its limits, the outcome is inevitable.
- The fable isn't metaphorical to Chinese leadership. It's their operating manual. They believe they are reading American strategy with the clarity of the tiger observing the donkey. They think they understand exactly what Washington can and cannot do.
- Washington operates from a completely different narrative about who holds power. American leadership believes it has leverage and a stronger hand. The confidence level is identical. The assessments are opposite.
- When both players in a game of chicken believe they're driving the stronger vehicle, the game stops being about economics. It becomes about which side will swerve first. Tariffs and currency moves become secondary to political will and national pride.
- A collision in this scenario isn't prevented by who has more resources. It's determined by who blinks. And if both sides are genuinely convinced they won't need to, the cost of being wrong gets paid by everyone.
Subscribe Today to Read More
Unlock instant access to this and hundreds of other evergreen essays that explore the world of narrative through hard science and human wisdom.
- Make more informed decisions as an investor and citizen.
- See through the nudges of Big Politics and Big Media.
- Become a better consumer of news.
- Maintain your autonomy of mind in a swarm of narratives.
- Join a community of more than 100,000 truth-seekers.
Looking for Deeper Insights?
Unlock exclusive market intelligence, trade ideas, and member-only events tailored for investment professionals and active investors with Perscient Pro.
VISIT PRO
DISCLOSURES
This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.
Statements in this communication are forward-looking statements. The forward-looking statements and other views expressed herein are as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. Epsilon Theory disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. This information is neither an offer to sell nor a solicitation of any offer to buy any securities. This commentary has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Epsilon Theory recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives.
Comments
Start the discussion at the Epsilon Theory Forum...