Trade dispute with US a political challenge for China's Xi

In this Wednesday, May 8, 2019, photo, a worker drives an electric cart past a display featuring the U.S. and Chinese flags in a special trade zone in Qingdao in eastern China's Shandong province. China said Thursday it will retaliate if President Donald Trump goes ahead with more tariff hikes in a fight over technology and trade, ratcheting up tensions ahead of negotiations in Washington. (Chinatopix via AP)

Trade dispute with US a political challenge for Chinese leader Xi

BEIJING — The tariff war between Washington and Beijing poses one of the biggest challenges yet for Chinese President Xi Jinping, potentially exposing his political vulnerabilities at a time when the Chinese economy is already slowing.

Xi needs to balance standing firm against U.S. pressure with the increasing urgency to reach a deal that would relieve battered exporters who have long underpinned growth and job creation, particularly outside the major cities.

The U.S. effort to win concessions from China on strategic industrial policies has put Xi's own prestige on the line. It also has cast into question the ruling Communist Party's social contract with the Chinese people: keeping authoritarian, one-party rule and ruling class privileges in exchange for delivering robust economic growth, better living standards and a higher global profile for China.

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