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It is said that it's better to say:

I don't think he is American.

rather than

I think he is not American.

Is it still the same when I insert the I-think part in the middlle of the sentence, or put it at the end of the sentence?
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Let's try, shall we?

I don't think he's American.
I think he's not American.

He's not, I think, American.
He's, I don't think, American.

He's not American, I think.
He's American, I don't think.

Well, in this case, transferred negation does not work at all if the main clause is not initial, at least in my view-- although in casual conversation you would conceivably hear any of these permutations, depending on the speaker's thought processes and mind-mouth coordination.

Interesting discovery, Taka.
But both
"he's, I don't think, American"
"he's American, I don't think"
are not correct, are they?
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You could hear them, as I say, in casual conversation, Pieanne. I was just considering conversation flow when I mentioned the possibility. As you can see, all of these permutations, what with the contractions and the informal topic, are unlikely to appear in formal writing anyway, unless as quotations of informal speech.
OK, I just found them weird... I guess you'll need all the uh... ah... well... and face expressions then...
May I ask you something? Could you edit my name to simply "Anne"? I don't like "Annie" at all ! Emotion: smile
Thank you,MM!
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It is said that it's better to say:

I don't think he is American.

rather than

I think he is not American.

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It's not a matter of it being better or worse, Taka. I would say that it's more a question of it being an unnatural usage when used as a stand-alone statement.

The first represents the normal neutral manner that ENLs use in speech. The latter represents a more charged version, a denial of a previous statement, as in,

A: He's obviously American.

B: I think he's not American.

B's reply represents a stronger denial than if B had said, "I don't think he's American".

When it comes at the end of the sentence, it is often an afterthough and it represents a weakening of the intial statement.

He's American, ... I think.

This is pragmatically weaker than; "I think he's American".