• President Trump has the upper hand in the China trade war, says CNBC's Jim Cramer.
  • Stocks move sharply higher after Trump casts a positive spin on the trade talks.

President Donald Trump has the upper hand in the China trade war because tariffs are hurting the Chinese economy way more than the U.S. economy, CNBC's Jim Cramer said Friday.

"Hate him or like him, he has them where he wants them," said Cramer, characterizing Trump and his hard line approach to try to get China to change what the U.S. sees as decades of unfair trade practices.

Stocks were sharply higher Friday, with Trump casting a positive view on the China trade talks, which resumed Thursday. The Dow Jones Industrial Average was soaring more than 300 points in afternoon trading.

The president plans to meet with Chinese Vice Premier Liu He at the White House on Friday. On Thursday, he said that Day 1 of the latest round of negotiations went "really well."

The discussions, aimed at ending the two nations' 15-month trade war, come days before Tuesday's deadline when the U.S. plans to hike tariff rates on some $250 billion of Chinese goods to 30% from 25%.

Cramer said Friday, "The Hong Kong situation and loss of face there doesn't help their cause. Can you imagine how desperate they are when they're worried about NBA ... talking about Hong Kong?"

The "Mad Money" host was referring to the uproar in China and the fallout for the league over last week's pro-Hong Kong protests tweet from the Houston Rockets' general manager.

"It's a crucial moment. I think that when billionaires run for the hills, like they did in the NBA, because they didn't want to challenge China, it's shameful," Cramer said. "Maybe it's shameful if companies aren't willing to speak for free speech."

The communist government in China is particularly sensitive about the months of anti-government demonstrations in Hong Kong. Beijing views the unrest in the Chinese territory as an affront to its authority. The U.S. has warned that strong intervention in Hong Kong by Beijing could hurt the prospects of cutting a trade deal.

"I always felt that there's a moral equivalence that our mainstream puts between China and the United States. Hate him or like him, Trump is not morally equivalent" to Chinese President Xi Jinping, Cramer said.