"I took on China and negotiated a new deal. Sure, it was painful at first, but it brought them to the table, and now we're much better off. American factories are open again."
I have a sneaking suspicion Trump doesn't care if he wins re-election or not and could give a crap if tariffs lead to recession. It plays into his narrative and image well, and that's all he really cares about. If he were smart, he would play a card that Dan Carlin over at hardcore history hypothesized: The 1-term president. Basically, it can be summed up as: "I'm going to shake this system so far to the core, I may only be a 1-term president, but I don't care! It must be done." I think he much prefers the billionaire lifestyle to a presidential one anyways. He hates living in the "shabby" white house.
I'm in the many intelligences camp: to me, emotional, academic, and athletic intelligence are very real consequences of a lifetime spent in different domains. To me Trump has spent his entire lifetime building and selling himself as a brand. The substance never mattered. He just knows how to make people want to buy "Trump".
From my perspective, his success in that realm is genius.
> Xi knows the Chinese economy must rebalance for domestic reasons
China lacks the middle class to be able to absorb the rebalancing.
> Chinese investors are eager to invest more in US assets and companies.
CFIUS already rejected most of the intended Chinese government purchases of US companies via shell companies.
> Xi's new power suggests he'll enjoy the authority and longevity necessary to complete China's adjustment
Xi has been aiming for dictatorship ever since he came to power, under the guise of 'routing out corruption'. that was long before stock market collapse. It's good US is crippling this dictator's desire to grow any stronger. Look no further to the uigher concentration camps to see the fate that could befall any western countries around the world.
> I don't think China has sufficient reserves in-place for a trade war
Correct. They are a cash-flow economy. Any small decrease in cash flow will severely crash it.
Here is an article on relative tarriffs:
https://www.nytimes.com/interactive/2017/business/trade-chin...
Mr. Trump’s advisers and some lawmakers don’t like this arrangement. For starters, they question why China’s average tariffs are about three times as high as those in the United States — and its tariffs on manufactured goods, which involve a lot of jobs to produce them, are far higher still. Those levels are allowed because when China joined the World Trade Organization in 2001, it was clearly a developing country. Lower American trade barriers have helped China increase exports to the United States, while importing fairly little.
Are we to believe in a well-balanced, fair world, tariffs should remain constant over time? China has gone from a 3rd world country to the 2nd largest economy in under two decades. It won't be long until they surpass the US, and they're just getting warmed up. Chinese people are smart, and incredibly hard workers, but they were given a lot of help by the west taking our technology over there and setting up shop, as well as accepting without questions any strategic restrictions placed upon them by the Chinese government (equity ownership, disclosing technology secrets, etc).
They're just now starting to move beyond the low skill manufacturing into hi-tech innovation, which is what "we" do, and has always been used as the simple reason for glibly dismissing any concerns about the growing economic dominance of China. I see very little reason to believe once China gets rolling in this area, they will become dominant in this as well. And what "doesn't come naturally" to them, for cultural/educational reasons ("lack of creativity" in their schools and all that), they can just buy.
China progressing to dominate the entirety of the manufacturing chain, from research and design through manufacturing, seems not just possible to me, but likely. And given their economies of scale and non-democratic political system, whose leaders don't have to concern themselves with the restrictions of election cycles (and now even term limits, yaaaawn) and the short term policy decisions that come with it, what's stopping them from dominating everything? And then what do we do?
But of course, that could never happen. All of this is going to work out peachy keen, don't you worry child. Last time I checked, there's more to history than Smoot-Hawley. How long ago was it that tens of millions of people were dying in China due to poor political decisions? How long ago was it that the entire world was at war, and the Japanese were cutting women's breasts off and using bodies for bayonet practice? Trump is likely the "the second coming of Hitler" our newspapers hint, yet simultaneously, all of the other barbaric behavior that has plagued mankind for thousands of years is all behind us, never to return. The end of history, at last!
Presumably this comment will be downvoted so I won't be able to reply to any follow questions or criticisms, in case I don't reply. But before that, it's probably a good idea to note that I am not predicting what is or is not going to happen - unlike so many others here, I have no way of knowing the future with any certainty. I can't predict where the DJIA will be 6 months from now. I don't even know what I'm going to cook my wife for supper tonight. So I certainly wouldn't presume to lecture anyone on what is or is not going to happen with about the most complex system the world has ever seen.
But the stakes are high enough that it makes me worry for my children's future, and I sometimes wonder if rather than taking what our leaders tell us at face value, a better idea might perhaps be to stop everything for a while, maybe educate ourselves on the details of the situation, maybe even listen to the reasoning of people who (gasp!) hold a different opinion. Perhaps we should be doing more structured, intentional diplomatic missions between countries of the world involving real people instead of professional politicians, so we can get to know our neighbors better and make judgement on facts rather than the propaganda we've been fed for decades. I feel like with the technology advances we've seen in the last decade, particularly in automation and social media, economics and politics are starting to accelerate beyond the point where our societies can safely handle the repercussions, at least with a high degree of certainty. If we're not as smart as we think we are, the consequences could be a lot more severe than a bad recession.
Fearmongering of the worst kind maybe?
Do you disagree?
- Chinese investors have a lot of restrictions, and if the government actually cared about this they would've relaxed some of the restrictions that don't have anything to do with the US
- It is not necessary to transfer more power to Xi in order to complete some sort of "adjustment" for China. History does not suggest a lot of happy endings for this type of scenario.
- Xi knows the Chinese economy must rebalance for domestic reasons and that excess capacity must be shed. The US move provides Xi political cover and fallguy as the inevitable unfolds.
- Chinese investors are eager to invest more in US assets and companies. Through the trade negotiations to come the US is likely to open its doors to greater Chinese investment as Chinese doors open to less or unrestricted investment from the US. This may take the form of sole US-owned investment, an end to technology transfers, or both.
- Xi's power consolidation was widely reported as the product of ambition. The alternative explanation, and the one I favor, is the inevitable rebalancing of China's economy will necessarily cause some social and political instability - at all levels of the Chinese body politic. Whereas social and political pressure has forced policy retreats the past decade in China, Xi's new power suggests he'll enjoy the authority and longevity necessary to complete China's adjustment. Suggests only, a lot can go wrong.
- China has much to do in supporting provincial governments, SOE, and other systemically important institutions. I don't think China has sufficient reserves in-place for a trade war, even if it were so inclined.