CNN – Quest Means Business New Tariffs — Trade War Robert Lawrence Kuhn, September 18, 2018 1 HOST: Now from Beijing, Robert Lawrence Kuhn is a long-time advisor to China's leaders and the author of “How China's Leaders Think”. Thank you so much for joining us. We appreciate it. Your reaction to Jack Ma's prediction and do you agree? RLK: The public stance of China has to be strong. The legitimacy of the government and of the Communist Party is based on two primary factors. One is the economic development. RLK: China is celebrating this year 40 years of reform and opening up really having created an economic miracle, an astonishing 50 times increase of GDP per capita. So that has been terrific. The second area is national pride and national rejuvenation. And frankly, China as almost every other country, if the two come into conflict, the latter has to prevail, especially in China with a history of 100 years of bullying, as they say, by foreign powers, mostly Western, and then of course Japan. 2 RLK: This has caused a deep scar in the Chinese psyche. So you have all of these factors coming together — but I can tell you the public stance of the government, of Jack Ma we just heard, is very strong and they have to be. RLK: If you look at what President Trump said, that is not a public posture for seeking solution. Not just saying tariffs will go up to 25 percent in January will go up, but then threatening if you retaliate at all, we're going to levy tariffs on everything else [$500+ billion Chinese goods]. That's a very aggressive stance and China really has no choice. 3 RLK: But behind the scenes, I talked to economists, the leading economists officials, every day. Everybody wants a solution and they want it a lot sooner than 20 years. But number one, they have to have a government in Washington that are people they can talk to, that they will have confidence that what they say will be implemented. And the Chinese want a solution because many of the problems, if we l