You and the MSM lie all the time. Meanwhile, you guys are missing a great Presidency. To whit:
Trump Quietly Bringing China to its Knees: Winning the “Great Game”
If you’ve heard anything about President Trump’s trade policies toward China, it’s probably been the media’s hysterical TRADE WAR scaremongering and little else. Trump’s tough rhetoric and bluster toward the Chinese, the media claims, will tank our economy. Better to just allow China to keep running massive trade surpluses with us indefinitely than risk “retaliation” by attempting to do something about it.
Trump, however, has the perfect response to the media’s incessant whining and worrying about “possible retaliation”: we already run a trade deficit with China in the hundreds of billions each year. What more can they possibly do?
He’s ignored the media’s scaremongering and charged ahead with his plan to reform and reshape our trade with the Chinese, an action long-overdue given that we’ve been running trade deficits with China since 1986, and they’ve only grown larger with each passing year:
The ruling class over the past three decades has either been unwilling or unable to get America on fair trade footing with China. They and their defenders in the media would have you believe the task is an impossible one: it is not possible for the US to erase its trade deficit with China because The Free Market Wants It That Way.
Either the old ruling class was too afraid of “retaliation,” or our massive trade deficits with China were by design?—?i.e. they worked to the benefit of the old ruling class. I happen to believe it was the latter. You can use many negative adjectives to describe our previous Clinton/Bush/Obama ruling elite, but the word “dumb” should not be one of them. They were not dumb. They knew exactly what they were doing.
I have a hard time believing they were simply being duped by the Chinese for decades on end, although on the other hand, duping the Americans has been a major part of China’s strategy for decades: they constantly deceive us into believing they are still a developing backwater country that needs lots of aid and assistance to “modernize” and raise living standards. They also constantly lead us on into believing they are on the verge of “liberalizing” and not being a brutal communist dictatorship.
So I guess it’s possible our old leaders were duped by superior statesmen.
But ultimately, the reason for our severely imbalanced trade with China doesn’t matter: what matters is the imbalance itself.
And President Trump is doing something about it. Notice the media no longer hyperventilates over a TRADE WAR that will wreck the economy?
That’s because Trump’s policies are working:
With China still running a record trade surplus with the US, it seems premature?—?to say the least?—?to say that Trump has won his long-overdue trade war with China.But it is not too early to conclude that, despite their threat of retaliatory tariffs, China’s Communist authorities know that they have lost.The increased tariffs to date, combined with the threat of more, have already clipped the wings of China’s economic rise. Its stock market is down 21 percent year over year, industrial output is slowing and its currency is weakening.Trump is the first president in a long time willing to throw the US’s economic weight around. He’s not taking us into these trade fights with one figurative arm tied behind our back.
He simply realizes that the US has a great deal of leverage over every other country in the world, including China.
We just weren’t using it—and by choice, too.
Again, whether this was because of stupidity on the part of our past leaders or whether it was by design, it doesn’t really matter anymore. What matters is we are now using our great leverage and seeing good things happen.
Looking beyond the bluff and bluster emanating from Beijing, there is evidence that Party leader Xi Jinping is looking for a way to stand down. Let’s read the Chinese tea leaves.In early July Xi ordered state-media outlets to tone down their rhetoric.“Self-deception and boasting will not bring about true self-confidence and pride,” the official Communist Party newspaper dutifully editorialized.You’re not going to hear about this in the media, of course.
This sudden modesty was a striking turnabout from five years of constant bragging?—?by none other than “Core Leader” Xi himself.Almost from the moment he took power in 2012, the Chinese leader was so confident that his own country’s rise was unstoppable, and so certain that America was in terminal decline, that he openly boasted about the China-dominated world to come. He even drew up a series of grandiose plans?—?China would dominate high tech by 2025, the Asia-Pacific region by 2035 and the world by 2049.There is a fantastic book about China called “ The Hundred Year Marathon” that I highly recommend. It goes in-depth about China’s plan to dominate the world by 2049?—?the 100 year anniversary of Mao’s triumph in the Chinese Civil War.
Xi may try to blame his propaganda flacks for overdoing it, but the Chinese people know who is responsible. In backing off the braggadocio, Xi is “slapping his own face,” as the Chinese say.The Chinese state-run media has been busily throwing up a smokescreen to cover Xi’s retreat. It has launched increasingly unhinged attacks on what it calls the “lunatic,” “insane” and “terroristic” Trump administration. After all, the masses must be told who to blame for China’s recent economic difficulties.The official Global Times has even published an article calling for US administration officials to invoke the 25th Amendment and remove Trump from office.Ohhh. Wonder where they’d get this bright idea?
It’s almost as if the American left’s opposition and “Resistance” to President Trump has gone to such ridiculous and seditious lengths that they are actively aiding and abetting America’s foreign rivals and enemies. The Chinese are clearly trying to exploit the rabid and hysterical Resistance.
Never forget that both the left and the Chinese want Trump out of office. When you see a leftist in the street screeching “IMPEACH,” just know that they’re doing China’s bidding, wittingly or not.
Here’s where it gets good:
In private, however, senior Chinese officials have come to view Trump as a Sun Tzu-like strategic genius. Yes, you heard me right. After the election, Xi Jinping tried to rope Europe and other Asian countries into a new, anti-US coalition, only to see this initiative fail. The EU recoiled from Xi’s embrace and is now in serious free and fair trade talks with Washington. Even the Philippines, which Xi tried desperately to woo with the promise of billions in investments, has now backed away from China. But as Xi was stumbling, Trump went on the offensive. He signed a new trade agreement with South Korea and expanded defense cooperation with Japan and Australia. Using the threat of tariffs as leverage, he even got Xi to agree to UN sanctions against North Korea, stifling the economy of China’s only formal ally. This week, with the successful renegotiation of a trade agreement with Mexico and Canada?—?the USMCA?—?Trump is now able to control China’s access to the entire North American market. Again, you barely hear any of this in the media.
Trump just scrapped and renegotiated NAFTA, a highly significant piece of legislation which defined North American trade for 25 years, and it was barely a blip on the national media radar.
The media would have you believe Trump just sits around in the Oval Office tweeting all day while watching Fox News, but that’s nonsense.
He’s getting shit done at a ridiculous pace.
Beijing officials now realize, even if many in the US foreign policy establishment don’t, that they are facing a master tactician, one who is moving steadily from deal to deal, getting as many concessions as he can, and then moving on the next.But they also see Trump as not just transactional, but strategic. He is pressuring China not just on the economic front, but on the military and ideological front as well. They fear that his goal is not just to rectify the trade deficit, but to eliminate the threat that a rising China poses to the US.And this is the grand objective: deal with a rising foreign power representing a threat to our global supremacy. For decades China has sought to replace America as the apex nation in the world, and our leadership hasn’t done a thing about it. Obama, recall, used to always preach “cooperation over competition.” He didn’t want to play the Great Game, didn’t believe in it. He also rejected the notion that our tensions with Russia over Syria were part of a great “ Cold War chessboard.”
But Trump is willing to play the game.
The Chinese have been set on their heels by an American adversary who quotes Sun Tzu: “The supreme art of war is to subdue the enemy without fighting. ”The Art of War has met The Art of the Deal. And The Art of the Deal has won. Only the terms of the surrender remain to be negotiated.China is eager to resume talks but, as Trump said this week, he is in no hurry to reach a deal.I am pretty sure he means that China is not yet sufficiently subdued.It’s nice that we finally have a president willing to flex US muscle in order to benefit our economy.
Dealing with a rising China, and fixing our trade policies in the process, will be a major unsung victory for President Trump. His work in this area will be unmatched by any president in recent memory and perhaps the crowning aspect of his “America First,” “Make America Great Again” legacy.
This is the stuff that really matters over the long-term. This is history-level stuff. Centuries from now, the history books won’t talk about what the GDP print was for the third quarter of 2018. They will talk about the rise and fall of empires, and how the mature American empire responded to the rise of China in the East. Trump is rewriting the history of this era, because until now all that could be written was, “The meteoric rise of China to global superpower continued unabated, as did America’s gradual decline.”
As an aside, when it comes to the media’s “TRADE WAR!!” rhetoric, China ultimately does not have that much leverage over us. They own a little over $1.1 trillion of US debt out of a total sum of over $20 trillion. Here’s what China could do with that:
If China did decide to sell off those bonds in a fit of rage aimed at President Donald Trump, then it could cause major havoc on international markets, said Jeff Mills, co-chief investment strategist at PNC Financial Services Group. “It’s certainly something they could do,” he said.The biggest impact would be on interest rates and bond prices, he says. If China floods the market with treasuries, and the supply of U.S. bonds spikes, then fixed income prices would fall and yields would rise. If yields climb then it would become more expensive for U.S. companies and consumers to borrow and that would cause the U.S. economy to slow down.Which would be bad for China. China relies so much more on our demand for their cheap manufactured goods. That’s why we have so much leverage over them. And that’s why their threats of hiking tariffs are so hollow: because they need our business. The whole reason Americans buy so much Chinese stuff is because Chinese stuff is cheap. Tariffs will make it not cheap, and so Chinese tariffs won’t happen.
But even if China were to dump US bonds en masse, it would be a major self-inflicted wound:
President Xi Jinping would have to be mighty angry to dump treasuries in droves, because a sell off would have a negative impact on its own financial affairs. “It’s like holding a gun to your own head and saying I have a hostage,” says Reinhart.If China were to sell its bond holdings, it would likely have to sell it at least some of the treasuries it purchased at a loss. If other countries sold, too, and prices plummet then it could lose billions. “It will inflict capital losses on itself,” says Reinhart.The U.S. dollar would also fall, which would then make this trade-related provocation somewhat moot, adds Mark Zandi, chief economist at Moody’s Analytics. A lower greenback would make U.S. exports more attractive, which would then hurt China’s own export market. “It would negate some of the impact,” he says. “Rates might spike, but the dollar would fall and what’s the net impact of that? It doesn’t feel like it’s a winning strategy.”As well, it’s not certain that selling treasuries would have much of an impact, says Mills. If other countries step into buy those treasuries, then interest rates could remain stable.The headline of the CNBC article describes China’s US bond holdings as a “$1.2 trillion weapon that could be used in a trade war,” but the article itself pours cold water on that idea. This is why journalists often like to remind people that they don’t write the headlines.
So the long story short is that China has very little leverage over us in a “trade war.” We buy far more from them than they buy from us. |
