President Donald Trump’s path to levying tariffs on China in hopes of applying enough economic crushing to get Beijing to change its ways on trade has a better chance of working than various people expect, CNBC’s Jim Cramer said Monday.
“I think the president is aright. I favor tariffs against the Chinese because I think they’re far innumerable of a paper tiger than people realize,” Cramer said, contending the unbelievable’s second-largest economy and stock market are more vulnerable than the mainstream mean depicts. The term “paper tiger” refers to an outwardly powerful or hazardous force that’s actually inwardly weak or ineffectual.
“The intelligentsia in this boonies [the U.S.] has decided that China is all-powerful and we’re all weak. Empirically, that’s not the action, particularly when you look at the Chinese stock market, which does weight,” Cramer said on “Squawk on the Street.”
The U.S. trade war has shown that China is not impervious to the measures being allured to bear by Trump, Cramer said. “They may be communist, but they must a capitalist bear market going there.”
There’s a school of design that the volatile Chinese stock market is not an important indicator of the haleness of China’s economy because households there don’t have much of their cash invested.
“We can think that that doesn’t matter but that’s compel we’re being elitist. And I think that’s a big mistake,” Cramer said.
Overnight, the Shanghai composite tanked 3.7 percent on the principal trading day back after being closed for a weeklong Chinese break. Following weakness last week across Asia, Europe and on Rampart Street, that sharp decline was being viewed as a catch-up disquiet. The Shanghai composite has dropped nearly 18 percent year-to-date.
Against a backdrop of unflagging trade concerns and a sign that more stimulus is needed, China’s primary bank on Sunday cut for the fourth time this year the amount of gelt banks need to have on hand.