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This is Paul Krugman's take. Seems to me that the big advantage of China is that they don't have to worry about their base.
China’s response so far has been fairly modest and measured, at least considering the situation. The U.S. has implemented or announced tariffs on virtually everything China sells here, with average tariff rates not seen in generations. The Chinese, by contrast, have yet to deploy anything like the full range of tools at their disposal to offset Trump’s actions and hurt his political base.
What they’ve been saying through their actions, in effect, is: “You think you can bully us. But you can’t. We, on the other hand, can ruin your farmers and crash your stock market. Do you want to reconsider?”
I don't buy that. If China can respond they would have already done it. China is hurting economically - almost all their economic indicators are down, exports down 20%, industrial profits down by a half, economic targets lowered. That's only what the China government is willing to release, who knows really what is happening. They were in some trouble before this trade war and are really going down the tank now. In contrast the US economy is still booming. Strangely however, the slowing China economy will eventually impact us. Anyways if China could afford to take further action they would have, but it would hurt them more than it hurts us.
The only thing China has going for it is they can wait out the whims of American changing politics and the democratic process. Wait 2 years - things may change. China doesn't have to worry about elections and politics of course, or some guy writing an article in a Chinese newspaper criticizing the government economic policies.
Krugman I never understand - Very intelligent and highly educated but he has both been for free trade and protectionist policies depending on who is in office at the time, as he has been very vocal on other issues not related to economics. Which tells me at this point he is just another biased political stooge. That's a pity as he has let his political views impact his economic views.
They're going after agriculture because the US is already restricting trade in semiconductors, network equipment, aluminum, steel, and other industrial goods. Trade in semiconductors has already fallen off dramatically. Krugman's take is always partisan, although he is correct that Trump is a blunt tool when it comes to trade.
Not only is Krugman's take partisan, but it is also incorrect. China imposed tariffs on far more US goods as % of trade than we have on theirs. Since we import 4x of Chinese products, we have to cover quadruple amount of imports in $ terms to impact the same amount of trade in % terms.
There are more tools left in the box than you can imagine. True, it would take some time to re-hone them and fashion new ones. But living creatures do it everyday, it's called adaptation and survival.
We'll both be fine with less of each other, even without each other, thank you.
The tariffs are a two-pronged instrument, not necessarily designed to resolve anything by this or that date.
Either way, then, it may prove to be an effective political propaganda tool, but it depends on other factors, too numerous to list here: the tool box is big and the imagination is bigger.
In any case, we don't need each other, and no one is going to commit economic suicide because of this slowdown and to some extent disengagement, or degearing, in economic globalism.
On the contrary, it is a healthy respite.
As poster #5 astutely mentioned, the acceleration in economic globalization peaked probably in 2001, and the slowdown began in 2008-2009, long before the current president came to office: he is a lagging indicator.
Personally I don't like throwing money away on shoddy, throw-away products and I am not comfortable with US workers and average income people legally on US soil being thrown under the bus and then being promised an impossible sop now and then.
Agree with Paul Krugman...China economy running on a globalist scale, while America becoming more isolationist...China can disregard US now and work with the rest of the world and will be just fine with their long term outlook and not having to satisfy a "base". The president is getting a real-time lesson that a market economy seldom follows orders...learning the painful truth that the White House doesn't run the world economy which is a large multifaceted animal that runs on its own.
Agree with Paul Krugman...China economy running on a globalist scale, while America becoming more isolationist...China can disregard US now and work with the rest of the world and will be just fine with their long term outlook and not having to satisfy a "base". The president is getting a real-time lesson that a market economy seldom follows orders...learning the painful truth that the White House doesn't run the world economy which is a large multifaceted animal that runs on its own.
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China is already turning its economy inward toward their people as consumers, as they advance to the first world. So it could be that their massive middle class is enough of a market without needing the USA. i.e. they could tend toward becoming more isolationist for their own reasons.
China will have more trouble buying stuff from around the world if they give up their USD's. There are few Yuan out in the world. This of course can change over time. So they could probably give up trade with the USA sooner than giving up on the USD.
China real weak spot is agricultural and oil imports. Especially the first.
China is already turning its economy inward toward their people as consumers, as they advance to the first world. So it could be that their massive middle class is enough of a market without needing the USA. i.e. they could tend toward becoming more isolationist for their own reasons.
China will have more trouble buying stuff from around the world if they give up their USD's. There are few Yuan out in the world. This of course can change over time. So they could probably give up trade with the USA sooner than giving up on the USD.
China real weak spot is agricultural and oil imports. Especially the first.
As economies and quality of life increases in Asian countries, the risk of crippling sanctions and tariffs from the USA reduces greatly. Keep in mind, we are going at this alone. All of our other partners will continue to trade with China at their current rates. Additionally China is building plants and manufacturing in other Asian countries. So even if we move manufacturing out of China, there is a good chance it will still be a Chinese Factory doing the work. That is still a win for China.
The longer this goes on the better it is for China. China can afford to wait Trump out even if elected to another term, that is the biggest issue with Trump's plan.
I certainly wouldn't want to live as a Chinese citizen, and have no admiration for their style of rule, but I can't believe how clueless the average American is, when it comes to comprehending exactly how advanced China is, and how much further ahead they are in many, many ways.
And yet, this 2000 year old country is still classified as a "developing nation", playing catch up to a 250 yr old country by stealing it's technology and semanding an uneven playing field. The only reason China is even where it is today is because of our massive assistance and allowing them to ride our coat tails.
And yet, this 2000 year old country is still classified as a "developing nation", playing catch up to a 250 yr old country by stealing it's technology and semanding an uneven playing field. The only reason China is even where it is today is because of our massive assistance and allowing them to ride our coat tails.
The same way that America has borrowed and stolen tech back in the industrial revolution. C'mon now, what did America invent? BTW Edison wasn't an inventor he was just better at getting it to market like Steve Jobs did. Did Apple invent the smartphone? C'mon cars wasn't invented here and America was just better at exploiting cheap labor than any other country.
We happily give away tech to China in hopes they can do a better job at refining our designs for us to gain.
Apple gave Samsung design then Samsung improved the design in so many ways but Apple wasn't the original creator of any products either. The iPod wasn't the first MP3 player, it was the first one marketed towards the masses.
And yet, this 2000 year old country is still classified as a "developing nation", playing catch up to a 250 yr old country by stealing it's technology and semanding an uneven playing field. The only reason China is even where it is today is because of our massive assistance and allowing them to ride our coat tails.
Operation tizard. Operation paper clip.
Plenty of countries have taken IP. Including the U.S. to build its “lead”. I’m other words, the U.S got all the military and scientific secrets of the British and Nazi empires.
Japan invented the mercantilist, currency-debasing, exporting strategy China is using. They also executed it better than China. And that strategy resulted in pulling several decades' worth of demand forward, triggering a deflationary spiral made worse by a falling population.
About the only argument that can be made in China's favor vs Japan is that China has 10x the population, but that ignores that about 400 million Chinese are inland peasants who are not plugged into the global economy. This was once seen as a bottomless reservoir of labor but the Chinese workforce has already started to shrink due to sub-replacement birth rates since the early 1980s. After the financial bubble pops in China, this inland population will be more of a liability than an asset. It's inevitable that popular demands for social insurance will rise after growth cools or stops, and that will further hobble China. China will get old before it gets rich.
Also don't count out the lassitude that will develop among younger Chinese who become disillusioned with the rat race, especially as winning becomes harder and the debts of the go-go years come due. China will be pretty similar to Japan in this respect, except with more corruption and less political flexibility.
Contrast this with the US, which has seen steady population growth alone among developed countries (all immigration, but in the US immigrants assimilate) and still has low population density and thus more room to grow before density acts as a psychological brake. (Developed country people don't like being stacked like sardines in a can and forgo children when density is too high.)
Looking at history, at past mercantilist attempts to overtake the Anglo-Saxon model, they have all failed. The catch-up is never complete. Apparently China with its billion plus people is supposed to break this mold and just powerhouse past the US, but I don't buy it. This just looks like Japan, Inc. all over again, scaled up by more people and scaled down by less sophistication.
Actually Germany was the strongest and most dangerous challenger to the Anglo-Saxon world, and they also failed.
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