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We've always said that China's first weapon, should the trade war escalate, is to do nothing and allow the RMB to depreciate.
China will have to issue a lot of government debt in the next few years. The government will need to continue migrating to its balance sheet, all the debt that should have been registered there in the first place. This will mean a rapid expansion of liabilities, but if handled correctly, the government will also gain valuable assets in the process.
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