China's President Xi Jinping arrives for the third plenary session of the National People's Congress (NPC) at the Great Hall of the People in Beijing, China, March 12, 2017. REUTERS/Tyrone Siu
James Rickards, Daily Reckoning: “Mandate of Heaven” in Jeopardy
U.S. policy through the Bush and Obama administrations was to soft-pedal questionable Chinese trade practices, pirating technology and theft of intellectual property in return for cheap manufactured goods and China’s willingness to finance trillions of dollars of U.S. government debt.
Now Trump has changed the rules of the game. He’s said lost jobs in the U.S. are not worth the cheap goods and cheap financing. He bet that China had no alternative but to keep producing those goods and keep buying our debt, even if the U.S. imposes tariffs to help create manufacturing jobs here.
President Trump and President Xi had been on a collision course involving issues of trade, tariffs, and currency manipulation, which are coming to a head.
It’s important to understand that China’s economy is not just about providing jobs, goods and services. It is about regime survival for a Chinese Communist Party that faces an existential crisis if it fails to deliver. It is an illegitimate regime that will remain in power only so long as it provides jobs and a rising living standard for the Chinese people. The overriding imperative of the Chinese leadership is to avoid societal unrest.
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WNU Editor: The Chinese have always viewed having $500 billion trade deficits with the U.S. and restrictions on U.S. exports as a given, and have formulated and implemented their economic policies to insure the additional employment of 20,000,000 new workers each year based on this expectation. The trade war has put all of this into jeopardy, and in turn has resulted in concerns that the promise that Beijing has made to its citizens will not be reached. In response the Chinese are now playing the waiting game, in the hope that President Trump will be defeated in 2020, and a new U.S. President will return to the status quo. I do not think this is going to happen, but this is the policy that Beijing has decided to follow. As to concerns that if there is an economic slowdown it will translate into a threat to the Chinese government. I think this fear is overblown. But the problem is that President Xi and his entourage believe that it will, and they are in the drivers seat right.
9 comments:
Everybody will adjust over time. China can't replace the lost US dollars directly with a new export market the size of the USA. The EU won't tolerate it and they are the only other option. BRI is another avenue to raise cash but I don't see it earning $500 billion/yr. So the Chinese have a major problem to solve.
For the US, losing China's agricultural market is a big hit in the midwest and no likely substitute exists. But other alternatives are more expensive. Losing out on US oil and gas is a hit as well, but other alternatives are more expensive. How long China wants to pay more for raw materials? When does that hurt its economic competitiveness?
Now for US firms a big race is started to move out of China to other far more friendly Asian countries.
The US still has the upper hand I think, for the long haul.
All true but the US has a serious employment problem and very likely those jobs will never come to the US. The large corporations will be very reluctant to pay for the increased labor costs.
Can't wait for CNN to tell us how incompetent Trump is.
Let's face it. They were wrong and misleading the nation - I would argue with intent and deceitfully - for more than 2 years. This network was and still is hellbent ob getting rid of the one guy who for 20 years said this would happen if he became president. Trump is delivering incredible wealth to the US - saving tax payers trillions over the years and finally getting rid of this tell tale of lies that the best years of the US were gone. All this CNN tried us to believe, that we should bow to China. F*ck that network. These liars. These dividers. They lie, use class, race and sex to divide us and make us miserable. No wonder it fell to the lowest ranking "news" network in its history. What a disgrace and they should be investigated. They put their democratic party affiliation over the wellbeing of the United States and its people. Telling us everyone who disagrees with them is a racist, sexist, toxic individual. Who does that? This is not normal. I want them investigated and their ties to CNN Turk and Erdogan and how they tried the US to drop the USD100bn arms deal that only Russia or China could have done instead of the USA. What the f*** is going on at this sh*tshow disgrace of a network to sabotage this president and his agenda that puts every American first?? A disgrace!
read my lips go to hell china
If we have issues with Labor; it's the availability of it.
We can now all be firm in badmouthing China. Unless you are one of those now beginning to suffer from the present situation. Don't like? suck it up and let comments here cheer you on
Look dude the thing is we know and accept to suffer. This theft and business corruption and currency manipulation just can't go on. it cost us trillions over trillions over the years. Let's put politics aside on this one. It's also a matter of fairness and principle and it's time to get behind Trump at least on this issue. And if you absolutely can't, OK. I get it. But please respect that he is fulfilling a top campaign promise. He's actually a politician who does what he says and I find that exciting. And finally jobs for all! Women! Hispanic! Blacks! Whites! Asian!
Bob,
What is the serious employment problem of which you write above?
I am interested in reading your perspective.
Roger
Roger
The workers can't make a decent living wage even with two full time jobs.
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