- The US will likely outlast China in the trade war, according to Kyle Bass.
- The “Big Short” investor said he believes China’s economy is feeling more pain from tariffs than the US.
- He thinks trade talks with China are happening, even though China has denied negotiations are taking place.
The US is in a good position to come out on top in its trade war with China, according to “The Big Short” investor Kyle Bass.
The investor and Hayman Capital Management founder said he believes the US likely has the upper hand in the trade spat. That’s because China’s economy looks to be more vulnerable to the impact of tariffs, and the US will likely “outlast” China in any negotiations, he told CNBC on Friday.
“In a tit for tat trade war, we win, every time. And I mean win, as in, the pain is much greater on their side than it is on our side,” Bass said.
Beijing is likely feeling more pain from the tariffs than the US due to the imbalance of trade between the two nations, he said.
The US imports around $440 billion worth of goods each year from China, he said, around 2% of China's GDP, according to data from the Chinese government.
By comparison, China imports around $140 billion worth of goods each year from the US. That amounts to around 0.47% of US GDP, which clocked in at $29.7 trillion last year, per the latest update from the Joint Economic Committee.
That suggests China's economy could take a bigger hit if trade between the two nations is disrupted, especially considering China's ongoing economic weakness since coming out of the pandemic.
Bass pointed to the nation's economic slowdown and higher yields in China's bond market as signs that investors see greater risk putting money to work in the country.
"They are facing a banking crisis, a youth unemployment crisis, a real estate crisis, their 10-year bonds are 160, and they're telling the world they're growing at 5%. It's a complete lie. It's obvious," Bass said. "We are the largest consuming nation in the world. Certainly, we can outlast China."
And while China has denied that trade talks with the US are taking place, Bass thinks it's likely that negotiations are underway.
"We are certainly having those conversations. China will never admit that we're having those conversations. It will never admit to being, quote, 'the weak one' in the negotiations," he added. "They are certainly in the worse position in these negotiations."
Trump told reporters on Wednesday that the US and China were "actively" talking, though a spokesperson for Beijing said that "none of that" was true.
On Thursday, a spokesperson from China's Commerce Ministry called on the US to remove all unilateral tariff measures on China "if it truly wanted" to solve the trade conflict between the two countries. The nation, though, walked back some of its tariffs on US imports on Friday, allowing imports of US pharmaceuticals to come into China without being hit with duties.