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China is pretending like the trade war isn't happening

Krystal Hu

President Donald Trump’s latest round of tariffs on about $200 billion worth of imports from China has made headlines across the globe — but not in China.

Print, online and television news outlets in China have largely stayed silent following Trump’s Monday evening announcement because of government censorship. People’s Daily, the state-run media mouthpiece for the Chinese government, didn’t dedicate any coverage to the major development. At 7 p.m. Tuesday local time in Beijing, Xinwen Lianbo, a flagship daily news program produced by China Central Television with a viewership of over 100 million, thoroughly covered President Xi Jinping’s whereabouts but made no mention of Trump’s tariffs and China’s plan to retaliate.

“Don’t touch the issue,” the government told other domestic media, Yahoo Finance learned. They have also been ordered to avoid writing about the recent market meltdown and other issues that suggest an economic recession.

(Carlos Barria | Reuters)

“About the trade war — no one mainstream Chinese media has reported… what happened on earth?” one user asked on Weibo, China’s Twitter. Some users complained they were not able to post content containing the word “trade war.” For social media accounts operated by foreign news outlets, including the Wall Street Journal, the comment and repost feature for any trade-related posts have been disabled.

It was a stark contrast from months back, when media coverage on the trade tension was intense and state-run outlets were using an aggressive and hawkish tone to fuel the nationalistic sentiment, with headlines like “Never retreat” and “Hit America where it hurts.” Xinhua, the state-run news agency was promoting hashtag “fanji maoyizhan,” which translates to “fight back in the trade war.” But since July, the government has been trying to calm the public down and put restrictions on media coverage that include messages such as, “Don’t attack Trump’s vulgarity,” according to censorship-monitoring site China Digital Times.

China’s shift of tone

(Photo: KEI)

The media silence doesn’t stop China’s market from feeling the pinch from the escalating trade war. The Shanghai Composite Index fell to its lowest close in nearly four years Monday after trade threats. And the exchange rate of the Chinese currency renminbi, weakened 45 basis points against the U.S. dollar on Tuesday.

On Tuesday morning, after China announced the decision to retaliate by imposing 10% tariffs on $60 billion worth of imports from the U.S., local media outlets were finally allowed to cover the issue by publishing the government statement.

Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, sees a change of tone now that China’s trying to tamp down the escalation. “Previously the statement is they would go tit-for-tat, but $60 billion is a very measured response,” Hufbauer told Yahoo Finance. “China’s leaders, especially President Xi, realize that tit-for-tat escalation is not in China’s interest. They want to damp nationalist fervor calling for stern measures against the American imperialists.”

So far, China hasn’t dropped plans to negotiate with the U.S later this month, despite Trump’s tariffs.

“Foreign investment in China will be a more important contributor to growth. I think the Chinese authorities recognize that they don’t want to discourage them from coming in,” said Hufbauer, who believes the negotiation between Washington and Beijing will resume before January, when Trump’s threatened 25% tariffs come into effect.  

Krystal Hu covers technology and economy for Yahoo Finance. Follow her on Twitter.

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