Hysteria reigns supreme at the dawn of the Trump era, with the President rebranded across the whole ideological spectrum as an American Mao or even an American Hitler.
Let’s step away from this “American [media] carnage” to examine a few facts concerning the unofficial G2: US-China relations.
A case can be made that Beijing has already landed a 1-2-3 punch, pre-empting the possibility of a US-initiated trade war.
It started with Jack Ma’s by now notorious visit to Trump Tower, when he developed his idea of helping small American businesses sell their products in China and across Asia through Alibaba’s network, thus creating at least “1 million jobs” (Ma’s number) in the US.
Then came President Xi Jinping’s masterclass at Davos, where he positioned himself as Ronald Xi Reagan selling “inclusive” globalization to the stalwarts of international turbo-capitalism.
Finally Ma again, also at Davos, came up with a crystal clear, cause-and-effect formulation on globalization and US economic distress.
Ma said, “In the past 30 years, companies like IBM, Cisco and Microsoft made tons of money.” The problem was how the US spent the wealth: “In the past 30 years, America has had 13 wars at a cost of US$14.2 trillion.” So what if the US “had spent part of that money on building up their infrastructure, helping white-collar and blue-collar workers? You’re supposed to spend money on your own people. It’s not that other countries steal American jobs. It is your strategy – that you did not distribute the money in a proper way.”
In the meantime, something quite extraordinary happened at the Asian Financial Forum in Hong Kong, one day before Xi’s Davos speech. China Investment Corporation (CIC) chairman Ding Xuedong, referring to Trump’s much-vaunted US$1 trillion infrastructure building plan, said that created fabulous investment opportunities for China and his US$800 billion sovereign fund.
According to Ding, Washington will need at least an astonishing US$8 trillion to fund the infrastructure spectacular. Federal government and US private investors are not enough: “They have to rely on foreign investors.” And CIC is ready for it – focusing already on “alternative investments in the US”.
Assuming the Trump administration welcomes CIC, and that’s a major “if”, it will be a slow start. Only US$80 billion of CIC’s overseas investments are currently held in US government debt. A massive national security/antitrust controversy will be inevitable. And yet, if successful, the move could be a win-win towards an American Silk Road.
Time to tweak your supply chain
Now let’s take a look at the options. Trump’s campaign promises to declare China a currency manipulator and slap a 45 per cent tariff on Chinese imports are, in theory, still on the table.
Peter Navarro – author of Death by China and Crouching Tiger: What China’s Militarism Means for the World – will be directing the new National Trade Council at the White House, focusing on “China’s unfair subsidy behavior”.
At the same time, countless reports such as this one are focusing on US-China trade war scenarios. And they do not look good for making America great again.
To start with, Beijing is not manipulating the yuan. On the contrary, the People’s Bank of China wants a stable exchange rate, translating into stable trade.
In case of a major rift, Beijing would not be inclined to dump US Treasury bonds en masse; that’s not exactly a win-win for Chinese reserves.
The US has way more foreign direct investment in China than vice-versa, so it’s easy to see who would be on the losing end. At the same time, Chinese businesses could profit from more tax breaks and invest in upgrading their production lines. The break down: China’s enormous savings funding the next step of industrial investment – especially as seven million college graduates hit the market each year. Now that’s a win-win.
Any trade war projection leads to the same results: depressed US consumption, less economic growth, and more unemployment – particularly among the rust belt/ “basket of deplorables” axis.
Then there’s the horror story for major US corporations such as Apple, whose exceptionally complex supply chains would take years to be tweaked. Boeing for its part relies on selling jets to China for 150,000 American jobs, and is already planning a giant new Chinese assembly plant.
The Trump administration will dump the Obama administration’s trade arm of the pivot to Asia, the TPP. No one in Asia is exactly shedding tears for it; at the same time no one knows whether Team Trump may be interested, further on down the road, in discussing a Free Trade Area in the Asia-Pacific.
What is absolutely certain is that, absent a trade war, the new US trade strategy will be perfect for Beijing, as China will accelerate the expansion of its New Silk Roads/One Belt, One Road project, especially across the Southeast Asian mainland, as in high-speed rail lines linking Yunnan province to Singapore via Laos, Thailand and Malaysia.
At Davos, Jin Liqun, president of the Chinese-led Asia Infrastructure Investment Bank (AIIB), even opened the door, half in jest, to US participation. So all bets are off: imagine the “American Mao” joining AIIB to be part of the action across Eurasia while accepting CIC investment to build the American Silk Road. Would that be considered an “alternative fact”?
Hope springs eternal. At least in my breast!
Yes that certainly would be an "alternative fact". But it is a fact that is akin to drinking hemlock for the neocons. Not to sure about the Donald. That man can take anything after the ribbing he had from Obama at the NPC dinner in the White House. On second thought, didn’t the Donald took out his revenge by hiring two high price hookers to give a "Golden shower" performance at the same bed that the Obama sleeped in while in Moscow? It is not above the Donald to do something sleazy like that.
Pepe ignores the part of Chinese strategy that seeks to destroy the American dollar. Trump understand this and seeks self preservation. If China backs off so would Trump.
The american dollar destroyed itself . Its the nature of the beast to destroy itself. The ponzi scheme just dose not go on into infinity. It crashes and burns. Just as the British empire and the Roman empire. Wake up it how capitalism works. Blaming the newer system to justify trade war which will lead to a world war is what has happened historically.
Frankly I dont think China wants to inflict any injury to themselves especially through destruction of the US dollar. And replace it with what? What China probably wants is to reduce the hegemony of the US dollar, thats about it.
KS Chin Reduce is one strategy, destrioy is another. How much of a reduction is destruction. China has about 60 bilateral trade ageeements where the commerce is done in Yuan, the local currency, gold or land. Specifically excluding the dollar. It’s OK for China, but not for us. So we both act accordingly. China intends to have an international commerce system exclusive of the western institutions because China doesn’t dominate it. So China doesn’t want to be part of the western system and that’s OK, but we have to survive the best way for us in this competitive world. Lastly, China is looking at the long term, thus arguments about today’s environment are not relevant.
Art Laramee Well no we destroyed the dollar people think others are stupid China Russia Iran but many have been on the end of a currancy war or currency manipulation ,one we generated to use a weapon one we have used many times in the past to destroy the currancy of another nation, one who won’t lean down and kiss our ass,hell I know we are exceptional but where is it etched in stone that the world or that any country must deal in the dollar,>>
KS Chi Did I impugn China’s right to put China first? I simply pointed out the impact on us which determines what we do about it.
Robert Ferrin your demonstrated knowledge and implied IQ warrants no reply is worthwhile.
"Trump’s campaign promises to declare China a currency manipulator and slap a 45 per cent tariff on Chinese imports are, in theory, still on the table." Minority leader Chuck Schumer made the identical statement today to Judy Woodruff on the PBS New Hour. But for anyone who, say bought a 30-year U.S. Treasury bond 10 years ago, only to see the U.S., under President Obama, dilute its value by literally printing an additional $10 trillion in new debt, the question is "Who in hell is the real currency manipulator?"
That said, Mr. Ma might do well to realize some people recall his country’s being the first to engage in monetary trickery by the issuance of fiat paper money by the Yuan Dynasty 800 years ago. In the words of Marco Polo, describing it to the Western world:
"All these pieces of paper are issued with as much solemnity and authority as if they were of pure gold or silver."
All the major countries have signed on to the China AIIB bank , against the US advice. China has one of the worlds largest gold reserves in the world. They are also holding onto large investments in US treasurys. If they wanted to cause trouble for the US they could dump those treasury notes. US capitalism is failing, they have been printing money to loan to Wall Street and the Banks at zero interest rates , which they inturn purchase back thier own stocks to prop up the stock markets and invest in treasury bonds to collect interest on interest free money. Who is the manipulator.. Great Britton used to be the world currency til their empire fell , then the US became the next . The US no longer produces that much to sell to other countries, except military weapons. Creates wars and instability all over the globe and sells military weapons. Trump intends to do the same , he is ordering a larger Navy fleet to be built up, to threaten China in the China sea for building on islands within the nauticle miles designated to all nations. China’s trade agreements with others are not hinged on allowing Chinese military bases be installed in other countries, but the US is the oposite. We have over 1000 foriegn military bases globally. Great Briton was the same before they collapsed at the onset of WWII . Wake up people. Trumps plan to bring jobs back will be low paying jobs . They are trying to whip up public approval for another war, but China and Russia are nuclear powers, unlike the middle east countries the US has destroyed
Pamela Saroff That was then not now. China operates on a win win policy with trading partners. They have large reserves of gold and are one of the largest purchasers of gold in the world, next to India. Yuan Dynasty 800 yrs ago is not now and far from it , completely differant culture then also. Has no bearing on their society and culture today. If you want to do that kind of comparison. Then lets talk about the US trickery on its own native peoples and the concentrations camps those left to survive live in today.
Shawn Napper Well they, (China) have stopped purchasing long term US treasury notes thats for sure. The US wants to keep building and expanding its military to dominate everyone, why should they continue to finance that kind of behavior. The US has shown it is out of control – one only look at the growth of national debt we continue to enlarge. Yet they are going to cut programs for the people to pay for them and still more military even under Trump. These are lies just like the lies to invade Iraq. The US behaves just like Hitler country after country, millions of refugees in EU from wars in Africa and ME. Who is to blame for these peoples lifes ripped apart.
Steve Jarvis I am happy to be at odds with this group of genius bloggers.
Steve Jarvis – no disagreement there. but it’s the US government and the Federal Reserve who have been doing the killing of the dollar.
Creating fiat currency out of thin air is an act of counterfeiting.
before I forget again …
Trump can build an American silk road (or yellow brick road). All he needs to do is to learn from Andrew Jackson and find a way to kill the Federal Reserve.
IMO, that’s the only way to make America great again.
I don’t believe it will happen under his watch. (I hope I will be proven wrong, but I am very confident of my assessment.)
That’s why I’ve said that Trump will likely be a joke and failure, like those before him.
Art Laramee ignores the history of the deciept and trickery of US policy . If China were to back off , which it has on other occasions to appease US, it serves only a temporary truse. China changed policy to allow larger investment from foriegn capital, namely the US.
So US corportations could expand further. Now, its this currency manipulation. Capitalist economies are built on a pyamid scheme, when they begin to max out they seek outside their boarders to offset their decline, (Imperialism). Beggar thy neighbor , (nationalism seek and buy thy own goods) is what happened in the great depression and was instumental in setting off WWII . It didn’t work, and this is what Trump is doing with , making America great again. He is preparing the American public, for more war. One other historic leader did this same phenominah, with the promotion of the superior race. A number of US allied countries are now seeking to realign themselves with each other and other countries, because they see the US through Trump,as turning on them. They will turn away if Trump starts slaping taxes on their products. Threatens Germany with tax on their autos if they build auto plants in Mexico. Whether it be Trump , Republican party , Democratic party, they are all war monguring to protect America’s interests abroad . In reality its war aboad to protect giving profit interests to the American wealthy at home, and the lower classes in society can just eat cake. Cause in the mean time lower taxes are to be given to the corporations and new low paying jobs with no benifits given to the public to rebuild American infrastucture.
Thanks for your insite. Well done friend. As far as the Fedral Reserve, yes that would be one step , and reinstate the Glas Steagal Act that slick willy Clinton signed away. And nationalize the oil , banks , and corporations, which further more would be illegal . In other words a democratic socialist run society based on democratic rule for the needs of the people ,not profits.. To save the enviroment from needless slaughter for profit motive. Reject the pyramid ponzi scheme it only leads to betrayal and war. Trump is not a asperation, he is a product of a system , Clinton would have only differed in some tactics, their goal is to protect the interests of those at the top of the pyramid, Who are currently sitting on trillions of dollars and growing. yet others are suffering more and getting less.
China’s growth will be the same eventually, as the BRICS countries will eventually max out. During the growth period its happey days ,til it maxes out then they start tearing the rug out from under those who helped build it up.
Art Laramee Hmm lol all our trade is done in the dollar ,seeing its the world reserve currancy which we stole from England who stole it from Spain who stole it from etc etc ect and all countries are required to maintain so many dollars,the reason many countries perfer to trade in their own currency is to get away from the dollar and its built in inflation which would infect theirs with the same,,.
Art Laramee Ur right about China doesn’t want to be part of the western system. The west’s system is based on value as being $, gold, silver, diamonds, and the game of geopolitics i.e. military or psychological warfare to loot all. China, now comming out of the British imposed communist system and has produced it’s massive developement based on Alexander Hamiltons American System Of Physical Economy, China wants to return to the deep human culture of confucian values -values based upon human creativity (Hamilton) and is in the process of establishing a new paradigm based on the common interests of mankind. So let’s look at who is a creative "mankind", and who is a "mouse" for the Empire.
Steve is rite about a lot of "stuff" but sounds like a grumble instead of a soluation.Gotta look at big picture. Gotta understand the future and what the future is asking us to do at this time, Gotta change the old Empires geopolitical paradigm from being based on money and war to back up CONTROL TO A COMPLETELY NEW ONE, WHICH CHINA IS NOW DEVELOPING . China is reserecting the economic system Sun Yat-sen developed when he lead the 1911 revoluation. Sun, educated in Hamiltonian Economics, set up the bankinfg system based on Hamilton. It is now being used for massive developement and including many more countries in Africa and S. America in a new paradigm carring the concept of "the commo0m interests of mankind" — human creativity and coperation. The ideas that the future necessates now to prevent the geopolitical system from turning us all into thermonuclear war radioactive fly ash. Even the Empire’s mice will be floating but the Royal Brits have said that they would rather have their chard bones lying on a brown planet then conceed to a new paradigm. Solution? Join the China (BRICS group) new initivative. Western countries must do Glass Steagall then the proven efective Hamilton credit/banking system that invites creativity as a never ending way into the future. Frack the Empire and their muts who get their great ideas when licking their behinds.