The focus has shifted from the typical initial totally perverse justifications for the current unprecedented (historic) spending plans, e.g., to “stimulate GDP” (a measure of spending) and “create jobs” (work is what we do to consume, not an end in itself) to meeting and defeating the threat posed by China’s expanding economic and military might. This is precisely the policy the Chinese would have demanded of their Manchurian candidate in return for their billion dollar Air Force 2 Hunter Biden “investment.”
America’s real casus belli (Thucydides provided three in 400 BC, fear, honor and interest) is part fear but mostly economic interest. China after a seven century hiatus is once again a rising imperial power following a traditional mercantilist approach of accumulating wealth through trade, simultaneously accumulating and investing in gold and a global belt and road trading system while restoring lost honor.
Why War?
Foreign policy, totally ignored during the 2020 Presidential election, is now front and center, with the Biden Administration, which initially kowtowed, now beating the war drums louder than did the Trump Administration. War is a continuation of politics by other means, and the politics among nations generally reflects their imperial interests. America’s Founding Fathers may have been libertarian theoreticians, but their complaints against the King related to the right to exploit America’s vacant land and resources. England may be “an island of coal surrounded by fish,” but the Admiralty of the Navy Winston Churchill recognized that England’s control of the seas required conversion to oil and that required control of the Middle East. The landscape had barely begun to recover from the Great War “to end all wars” when the same parties rearmed for the rematch.
WW II wasn’t fought over political Ideology: The fascist National Socialists first allied with the socialist communists, then attacked them. Imperial Britain allied with Imperial Russian in WW I and socialist Russia in WW II. The US allied with socialist Russia to fight the fascists in WW II, then joined Britain and formerly fascist Germany in a cold war against the socialists after that. The end result was US imperialism supplanting British Imperialism just as FDR allegedly plotted.
Imperial wars are won primarily through economic strength. Socialist Russia (aka the Soviet Union) won WW II by reverting to nationalist sentiments (patriotism) and terror losing 27 million people. Socialism has eventually failed everywhere due to the diminishing returns to coercion and terror. The Axis defeat didn’t reflect the weakness of fascism as an economic tool of war: the Allies had twice the economic and demographic might of the Axis, and the US employed similar fascist methods.
America Wins the Cold War but Loses the Peace
The US generally supports trade based on comparative advantage, open markets and open transportation routes, and seeks allies that do the same. But trade outside the US, The British Commonwealth and Western Europe is mostly in commodities needed by these importers under the political control of the exporters. Hence the political intervention by both parties during the Cold War in these exporting countries to guarantee access to and the price of these commodities. In addition, poorer countries generally implicitly import pollution and export cheap labor.
The US hope that the collapse of the Soviet Union would induce a politically weak Russia to open it’s vast resources to foreign exploitation under the guise of joining the US global trading block was never very likely. American military support for the former provinces of the Soviet Union and border states was a sure way to restore Russian nationalism and re-militarization. With no history of representative government, Russia instituted an essentially one party democracy.
China started economic liberalizations in 1978, and by the 1990s had substantial exports to the US. As the decade wore on, it was clear they weren’t going to open their economy and political system to the west. Following the 1995-96 Clinton Administration’s provocation in the 81 mile wide straights of Taiwan, a Chinese speaking island, China built the biggest (if not the heaviest) navy in the world. (Parenthetically, when the Russians armed the Spanish speaking island more than a hundred miles from the US coast, the US imposed an embargo and threatened nuclear war. Cuba supplied really good cigars and a better base for the mafia than Las Vegas.)
Then Clinton reversed course and supported Chinese entry into the WTO, considered at the time the disaster it has since become, leading to a mammoth trade deficit. China has largely supplanted US manufacturing, while importing (or stealing) US technology, importing raw materials and miss-priced water from drought stricken California (almonds), pollution and historically recyclable trash.
The stated reasons for supporting Chinese entry to the WTO were twofold. First, to foster a democratic China, a lost opportunity (“Wilson’s abandonment of his own ideals spurred China to turn away from American Democracy and toward Soviet communism.”) But contemporary American democracy reflects the first part of Churchill’s quip while individual liberty, the original source of American moral superiority, is gradually being usurped by the state. Second, to defuse the conflict over Taiwan, which provides 92% of the global supply of super computer chips, a vulnerability of US imperialism.
Why Kowtow Now?
Henry Kissinger believes war is inevitable for the same reasons as Thucydides: China is the rising imperial power while America is the declining imperial power, like England fighting rising German imperialism in the Great War. America’s global influence has been declining for decades, and continues under the current administration. Hollywood knows this. From the default on the convertibility of the dollar to gold a half century ago, the cornerstone of the international trading system, to the cancellation of the Keystone pipeline on the first day of the Biden Administration, America’s willingness to honor contractual obligations to its trading partners, including the value of its currency, is in question.
When will China’s economy overtake the US? That depends on the relative supply of labor and capital and how productively it is deployed.
China has a population 60% greater than the US, Europe and Japan combined. Its people are generally smarter, as evidenced by the discrimination of American Universities. They are more industrious as China was arguably less socialist than the US even before socialist Bernie Sanders took control of the Senate Budget Committee. And they are generally entrepreneurial everywhere.
China saves about half its income, more than ten times that of the US over the past few decades. The Chinese government influences investment decisions, but “America’s Muddled Industrial Policy” is arguably worse, especially with political earmarks.
America’s out of control deficit spending is predicted to bring back 1970s stagflation. China’s paper dragon is learning to breath fire while the US is becoming a paper tiger at war with itself. Nobel economist Michael Spence argues the global system can benefit all without conflict if we kowtow now. Good advice.
Kevin Villani
Kevin Villani, Chief Economist at Freddie Mac from 1982 to 1985, has held senior government positions, has been affiliated with ten universities, and served as CFO and director of several companies. He recently published Occupy Pennsylvania Avenue on the political origins of the sub-prime lending bubble and aftermath.
Generals (and politicians) fight the last war. Resident Biden* probably thinks he is fighting the war of 1812. This time around, our worthless Political Class has not yet realized that wars can be fought with TVs, DVD players, nuts & bolts instead of bullets & bombs. When the former Arsenal of Democracy is unable to make its own medications, or even its own solar panels, war simply requires that the exporter stops exporting to the importer — and the importer caves.
Put slightly differently, the war between the US and China is over before our Political Class idiots even realize they have been losing a slow trade war for about 3 decades.
The US is now in the position of Germany and Japan at the end of WWII — industrial base has been destroyed, infrastructure is collapsing. But the US will not have the benefit of a Marshall Plan to help rebuild. If we did not suffer under a dishonest Uniparty which is in the pocket of the Chinese Communist Party, we could get our act together and rebuild. Probably only take something between a quarter- and a half-century.
is Frum drunk, (some call him pinnette) if we had an academic corporate and media class that wasn’t insane, then we’d have a chance. probably,
“Put slightly differently, the war between the US and China is over before our Political Class idiots even realize they have been losing a slow trade war for about 3 decades.”
Um, those idiots have sold us out, quite consciously, and made themselves filthy rich doing so. Assuming they don’t know what they’re doing isn’t tenable anymore.
Ain’t gonna be no US-China war. It wouldn’t serve either our “elites” or theirs. Besides, our military is a pathetic joke. It has no interest in taking on a near peer–that would reveal the fact that it’s just a money laundering scheme for the few big contractors left at this point.
The only possible hitch in their plans is if some outsider comes in who actually represents the American people, but after 2016 They have no intention of letting that ever happen again. Of course the real obstacle is that their plans stink and they’re morons, but they’re going to set the world on fire in their attempts…
Brian: “Um, those idiots have sold us out, quite consciously, and made themselves filthy rich doing so. Assuming they don’t know what they’re doing isn’t tenable anymore.”
That is a possible explanation. You are asserting that instead of our Political Class merely being idiots, they have deliberately been committing treason. Quite a charge!
Personal guess is that they have been applying a very high discount rate to future events, as an economist would say. They are looking only at the benefits accruing to themselves today, and not considering the longer term implications for everyone including themselves.
Classic example was Billy Clinton authorizing sale of missile guidance technology to China. If Clinton had really been a traitor, he would have done lots more, like defunding the US military. And business leaders offshoring US manufacturing capabilities to China were really stuck in a Tragedy of the Commons — the decision made sense to each individually by allowing them to compete by cutting prices, but when everyone did it the US market went sour because of the loss of jobs.
Traitors or idiots — the Political Class has certainly let us down. But who elected the Political Class? We are getting what we collectively asked for.
Speaking of the US military–did you see Darth Austin?
We haven’t had mature adults in charge since Old Bush’s day (not that I particularly admire the clan); Trump had some good instincts and didn’t care what people called him, but he was too egotistical for his own good and ours.
The Ds and Rs are two sides of a counterfeit coin.
Nowadays, if I think of DC, I daydream about lampposts.
Cousin Eddie
Oh yeah, China.
The war has been going on for a while–decades at least.
It has been said that Americans master Poker, Russians master Chess, but the Chinese master Go. Clausewitz wrote that of all other human activities, a game of cards replicated best the dynamics of war; as Marxists you can bet the ChiComs have read Clausewitz, but
their own historical experiences and deep-rooted cultural attitudes reflect more Go than Poker or Bridge (much less Chess).
The obviously engineered (if probably accidentally–prematurely–loosed) Crud is no oopsie, and no one should be surprised when a more, say, focused variant is introduced and does some real damage.
Cousin Eddie
I for one, welcome our new Chinese overlords. America has done a terrible job at leading the would, and the Chinese can hardly do worse.
As well their stated intent, is to improve the lot of the common man.
It’s amusing to see the China troll finally express a true sentiment.
Mike, you again, are the troll here. ;)
I’m with Penny. I look forword to the day when I can walk into our new Chinese style grocery store and buy Penny’s pancreas. There are plenty of Turkey Vultures here in Arizona, and never enough road kill. They love sweetmeats!
You’ve never actually been to the PRC, have you, Pen?
Go. Compare BEJ to YVR. And then adventure out from the airport. Talk to citizens. Give us feedback. In fact, if you’re feeling adventurous, spend some time in Xi’an or Kashgar.
Let us know your impressions.
Looking forward to your learned commentary.
“You’ve never actually been to the PRC, have you, Pen?”
I have lived all over the world, on 3 continents so far. As I need my modest resources for my children, I cannot afford to visit China. But I would love to, perhaps we can take up a collection. ;)
I would be pleased to do a serious write up, as to my impressions.
Capitalist Roader — I have been to Xi’an, old Chang’an, former capital of an earlier Chinese empire.
The terracotta army is of course magnificent, as expected. What is less expected is the clean efficient mass transit that would make New Yorkers green with envy, or the cable car up the mountain that would get some respect in Albuquerque, or the general attention to history such as the awesome city walls or the carefully preserved broken window from an unsuccessful assassination attempt on Chiang Kai-shek.
But more to the point — the atmosphere reminded me of how old folks talked about life in the West in the 1950s. People were well-behaved, respectfully dressed, relative absence of tattoos; great feeling of safety among crowds of people who were mostly smiling and cheerful. The absence of a police presence was also noticeable. In short, it was nothing like (say) Romania back in the days of communism. No evidence that people are afraid of their government.
Just telling you what I experienced — if it does not fit your preconceptions, so be it.
Gavin: Well in that case I’m sure the Communist Party will do very well in the next elections then…
Chiang’s case is interesting–his rep has waned and waxed in the West. In my undergrad days, when Edgar Snow was still on the reading list, he was a vicious non-entity.
That the PRC should in some measure rehab(?) his image shouldn’t surprise me, I suppose, but it does.
Cousin Eddie
Pen..”As well their stated intent, is to improve the lot of the common man”
To Serve Man?
Brian: “I’m sure the Communist Party will do very well in the next elections then”¦”
No doubt about it! For much the same reasons that the Democrat Party will do very well in the next elections in my neck of the woods, no matter what happens.
Someone remarked that China and the US have a lot in common — both have large intrusive governments and large privately-owned businesses. The difference is that in China the government tells the businesses what to do, whereas in the US the businesses tell the government what to do. There has to be an element of tongue-in-cheek in that remark, but for sure there is the sense of competence in China — the sense that used to exist in Can Do America but has now significantly receded. Things get done in China!
One recent random example of what we have done to ourselves:
https://www.thedrive.com/the-war-zone/14564/you-have-to-hear-what-keeps-the-head-of-u-s-strategic-command-up-at-night
“… the Minuteman I ICBM program met or exceeded all its expectations and objectives, delivering 800 three stage solid fuel rocket ICBMs, silos to put them in, and a very elaborate command and control architecture in just five years at a cost of $17B in today’s dollars””and none of it had been done before. Now, even with all we have learned over more than half a century, it takes 12 to 17 years and $84B to build half the missiles, refurbish the existing silos they will sit in, not build new ones, and the command and control architecture is a separate budget altogether.”
Our problem is not in China. Our problem is here at home. It is time we did something about it.
Yes, let’s get the PRC to provide for the general welfare.
This struck me as funny, in regard to US-USSR cultural rivalries in the Cold War. (Points if you can tell who wrote it w/o peeking below)
“Admittedly, the Americans liked nothing better than to think of themselves as the plucky underdogs. They exulted when Van Cliburn, a Texan boy, won the 1958 Int’l Tchaikovsky Piano Competition in Moscow. They went into ecstasies when Bobby Fischer beat the Russian chess grandmaster Boris Spassky in 1972. And nine years later they could scarcely contain themselves when their ice hockey team narrowly beat the Soviet world champions. The Soviets, for their part, showed no sign of wishing to challenge American dominance in the realms of country music, surfing, or baseball.”
Cousin Eddie (keep going)
Niall Ferguson, War of the World, footnote p. 609.
“Mike, you again, are the troll here. ;)”
Trolls contribute nothing to the blog. That’s why they are called trolls. They come out from under the bridge and harass travelers or those who do contribute. I have yet to see you contribute anything worth reading.
“To Serve Man?” LOL.
They do release their entire plan for the country, anyone can go read it, and the intent, as stated by the CCP is to improve the lot of the common people as that is the parties focus. As they have raised nearly a billion people from poverty to middle class status in a very short time, I think we can take them at their word.
“Trolls contribute nothing to the blog. That’s why they are called trolls. They come out from under the bridge and harass travelers or those who do contribute. I have yet to see you contribute anything worth reading.”
Which perfectly describes your participation in this thread. ;)
I do have to give the PRC credit for giving up on Communism as a prosperity-engine.
Of course, as far back as the NEP of early Soviet Russia (and there are many other instances) Red regimes have found it necessary at times to allow the human proclivity toward exchange to operate, the alternative being unplanned starvation (the worst kind).
The tricky part is allowing people enough freedom to better themselves but not enough for them to start wanting to better themselves too much.
Chinese history in recent centuries has been a series of radical lurches, some imposed, some chosen. Stasis, or steady improvement generally, seem to me the least likely scenarios.
Cousin Eddie
As well their stated intent, is to improve the lot of the common man.
Improve the lot of the common man by killing 50 million of them?
” by killing 50 million of them?”
Hey, a revolution is not a dinner party, and you can’t have winners without losers.
Cousin Eddie
Gavin, re Minuteman–I was about to point out that you need to convert the original $17 billion to today’s money, but I see that has already been done. So the $84B to $17B (for half the number of missiles) is an apples-to-apples comparison. Good grief.
What is most disturbing is the time element, as General Hyten pointed out.
See my post A Fiery Peace in a Cold War for some USAF missile program history.
Yes, what is the cause of that reverse learning curve?
My uninformed guess is that much of today’s $84 Billion cost is overhead — lawyers writing reports that no-one will ever read, work teams being slowed down by Away Days to contemplate their personal responsibility for 17th Century slavery, executives paying themselves and their expanding groups of cronies unconscionable amounts of money, and so on.
This is what authors like Mancur Olson and Joseph Tainter have identified as the cause of failure of every prior civilization — the growth of an unsupportable burden of unproductive overhead.
It may be that a relatively new society like the CCP’s China can outperform us because they do not yet have that crippling overhead. And it is small comfort to us to know that history says China too will someday follow us down the same top-heavy path of doom.
The challenge is to find any government program that isn’t in even worse shape. That’s assuming that a new missile is actually produced. Military procurement processes that churn through billions and decades only to be abandoned is the new norm. The ones that end up producing utter crap are even more wasteful.
The Navy’s LCS program is an example of the latter. It never produced usable ships and they’re already starting to scrap them. They’ve moved on to buying an Italian designed frigate for a fraction of the cost.
Another example is the KC47 program. How hard could adding fuel tanks and a boom to an already well proven air frame be? When between them, Boeing and the Air Force screw up every conceivable step in the process, you have what the KC47 has become. I can hardly wait fro the B-21 to move from fanciful renderings to actual production, surely they’ll get it right this time.
And so on and so forth. To borrow a phrase, you’re going to need a bigger blog.
You don’t know about Minutemen missiles, and why they are pretty well useless, except for first strike?
Their locations are not secret and an SS18 Satan throws 10, I meg warheads, and is very accurate indeed. They have been useless as a response since the mid 70s.
china killed 60 million people in the last century, so not a good look
Be fair. “China” didn’t kill 60 million, some Chinese did. Chinese full of crappy Western or Western-derived ideas.
Compare and contrast the Taiping movement and Communism. In one case a Western religion (yes, I believe that is the case, in the case) is garbled–not to say tortured; in another a Western secular utopic ideal (Communism is as Western as John Wayne’s horse) is garbled–not to say tortured. And millions die.
Cousin Eddie
The KC47 tanker program would make a perfect textbook case study of the massive corruption in the current military procurement system. A total farce from day one.
china killed 60 million people in the last century, so not a good look
I agree that “China” did not kill those people. China has a long history of misrule going back to the Mings. China had advanced metallurgy and cast iron bells a thousand years ago. The Ming period saw the end of long distance ocean sailing and much else of industrial practice. By the time the Ming ended the expedition period in 1433, most of the historical accomplishments of China has come to an end. When Europeans arrived, the use of iron, for example, had disappeared. The inventors of gunpowder had no guns. Cixi was so corrupt that the shells fired by her cannon in the time of the Boxers were filled with sand . The money for munitions had been stolen.
The Revolution of 1949-50 resulted in another period of wild misgovernment culminated in the Cultural Revolution, which did kill 60 million.
Deng introduced the role of capitalism but Xi seems to be reviving the period of misrule.
Gavin, consider that you would have had a similar experience visiting Berlin in the mid-1930s with well-behaved, mostly smiling and cheerful people. You definitely would have found a great feeling of safety among crowds of people.
If you would have wandered off from your tour group in Xi’an, though, and ventured into the Muslim areas, you may have seen and felt something different. I saw a haunted Muslim minority in Xi’an, similar to what I probably would have seen if I strolled through Jewish neighborhoods in 1935 Berlin. Scared people just hoping to survive the inevitable next government crackdown.
I wasn’t a tourist in Xi’an although I did go see the terra-cotta soldiers. They were interesting. Instead, most of my time in Xi’an though was spent in PLA-run factories. Those factories didn’t get the full Potemkin treatment as the touristy areas do.
My conception after spending a week in Xi’an was that it was an Orwellian police state.
Interesting, CapitalistRoader. We each inevitably see the world through a key hole — and we need to remind ourselves there is lots we don’t see. However, I did see the Muslim area in Xi’an around the mosque; it is a major tourist attraction. Of course, the tourists are almost all Chinese. That was one of the big surprises for me in China — the huge internal tourist market and the state-of-the-art tourist attractions.
For the record, I was not there with a tourist group. I was the sole Westerner embedded with a group of Chinese professionals on a project in Western China. At the weekends, some of them would volunteer to take me around to see the sites. As you undoubtedly observed, it is very difficult for a foreigner to move around China independently simply due to language difficulties and the challenge of ordinary financial transactions if one does not have a Chinese bank.
Orwellian police state? That was not the sense I got from my Chinese opposite numbers, or from observing Chinese people in various public and private locations.
One time I did wonder was when we were driving to visit a work location. As we left the city, we came to an imposing barrier across the road. My first thought was exactly that this was the Orwellian police state checking that we had authorization to travel — but no! It was an ordinary toll both for the toll road. So there we were, in this Communist Orwellian police state, in a smooth privately-owned automobile, driving along an excellent toll road crossing some difficult terrain through tunnels and viaducts, while my Chinese opposite numbers chatted about their wins & losses in the stock market.
Clearly we were looking through different keyholes. We each saw only part of the whole.
My daughter, who is no conservative (although she recognized 1990s Cuba as a police state), spent a few weeks in China with friends who live there. They were in Shanghai and went out for breakfast. Her friends told her not to eat the fluffy looking muffins for sale in a street shop as detergent was added to make them fluffy. Just an anecdote but a significant one, I think.
Gavin, my guess is that the Chinese professionals who took you around to see the sites have fairly high scores in the PRC’s social credit system. The Muslim factory workers I observed probably did not, and it showed on in their eyes.
My impression is that being Muslim in Western China today is like being Jewish in mid-1930s Berlin. Yes, there were rich Jews and poor Jews and the rich ones were probably quite happy. Some of them probably even had fast cars to drive on the new high-speed autobahns, the first high-speed roads in the world. But technological advancement in transportation doesn’t equate to robust respect for human rights.
But that was just my impression.
I understand the impulse, but in history Berlin was far far from being as Nazified a city as many others, and in fact more than a few thousand survived the war there. Berlin was the center of mitteleuropaische German-Jewish culture (that world-changing revolution of the liberated) in much the same way, or more, as it was for German culture as a whole.
I’m not sure police state is a useful term any more for China’s rule in Muslim provinces. The entire population is basically under electronic surveillance 24/7. As a BBC report put it, the Authorities know whether you left the house by the front door or the back this morning–literally.
Another difference is that Jews had succeeded spectacularly in Germany; Uighers in China, not so much.
Cousin Eddie
A Chinese professor has some assertions about the current situation:
https://www.powerlineblog.com/archives/2021/07/the-decline-of-the-west-2.php
Cousin Eddie, I’d remind you that Zheng He was Muslim. Muslims held positions of great power during the Mongol Ming dynasty and succeeded spectacularly in China, much as the Jews held positions of power and succeeded spectacularly in the Weimar Republic. Each ethnicity was of similar proportion of the population in their respective countries yet each had an outsized influence on their society.
The Han Qing Dynasty started the gradual deterioration of the Muslim people in China and the Great Leap Forward and Cultural Revolution put the nails in the Chinese Muslims’ coffin. Despite Deng’s efforts, the Cultural Revolution was never really won. What we have in the PRC today is one-party totalitarian Han rule. And one-party rule certainly is appealing to many on today’s left:
I can understand this yearning from the left in today’s Western democracies. The white people who dominate those democracies want peace and stability and don’t seem to mind the police state and censorship required to establish it.
CapRoad, you are of course correct about the historical record–I should have said “in recent times.” (It’s often forgotten that early Christianity went East as far and fast as it
went West, if not more so; there were Nestorian Christians in the Imperial service also,
I believe.)
Now I should be clear that I’m not particularly concerned about the fate of Uighurs in China or Muslims in general. They have billions of co-religionists who should, in theory, care about their wellbeing; likewise, people of other faiths might be expected to do something; finally, secular humanitarians (I stop at secular).
I doubt that there are any good political options for the other states of the world to do anything about China even if they are inclined to; all I can do is hope all the sh-t happens there and not here.
Having just finished Ferguson’s War of the World, I’m not optimistic.
Cousin Eddie
From David Foster’s link: “Treasury Secretary Janet Yellen seems to see things the same way as Jin. She has said that tariffs on Chinese goods hurt American consumers.”
As if the inflation caused by money-printing does not hurt the US consumer! A tariff is simply a tax. Government can impose a tax anywhere along the chain — on the wage earner, or the company he works for, or the purchaser of an item, or the importer. Or FedGov can cause the hidden tax of inflation. Whichever way government chooses, the price is always ultimately paid by the citizen.
Yellen is looking no further than the end of her nose, concerned only about the immediate effect of a tariff on raising prices to the consumer. If she looked further, she would see that leveling the playing field with tariffs would in the longer term result in production coming back to the US from China, bringing jobs and tax revenues. That sounds like a beneficial way of raising the revenues government so desperately needs.
It is also worth contemplating the implications of Prof. JIn’s observation: “They [USA] need us [China] to provide goods. Otherwise, you [US] won’t be able buy anything with so much money …” The CCP knows that an import-dependent de-industrialized US has already been emasculated. It is unfortunate the US Political Class does not care.
China also needs a few things: food and fuel, to name the ones that are most obvious.
David — Good point! The data are confusing (which currencies? what definitions?) but it is clear that China pays for those necessary imports by exports of similar value.
Roughly, it looks like the situation is that China’s trade with the Rest of the World excluding the US is just about balanced — annual imports of about $2,000 Billion balanced by annual exports of about the same amount. However, China’s trade with the US is very unbalanced — China exports about $480 Billion to the US and imports only about $150 Billion from the US. Overall, the US gets approximately 20% of its imports from China, whereas China gets only about 10% of its imports from the US.
What makes the US situation untenable in the longer (or not so much longer?) term is that US goods trade with the Rest of the World excluding China is also deeply in the red by about $420 Billion annually. Houston (or DC Swamp), we have a problem.
China’s age demographic problem is looming which is why they’re subjugating so many demographically much younger African countries with massive debt. The young people in those African countries can look forward to working for decades in an attempt to pay down those debts. And the PRC will trade debt for seaports as it did in Sri Lanka and Djibouti.
CapitalistRoader points to something important enough to take a few steps farther.
Given that we’re all still material girls, and will be for a long time, what if those young people catch on, and decide not to pay up on the debts their elders contracted? How do the Chinese get those raw materials and maintain all that infrastructure?
Will China’s #1 (and done) sons and high-tech be able to police and enforce that access if the natives become restless, as we know they can? Especially if other powers and interests are considered, I’m not sure the Chinese aren’t tar-babying themselves.
I’ll be back.
Cousin Eddie
Cousin Eddie: “… what if those young people catch on, and decide not to pay up on the debts their elders contracted?”
What if the US dollar collapses and the Treasury Bills that China has not yet sold turn out to be worthless? Almost every country has renounced its debts at some point. The people who lent money lose it, and life goes on.
” How do the Chinese get those raw materials and maintain all that infrastructure?”
Same way that China gets those resources today — they trade for them. Basically, China imports raw materials, adds value, and exports manufactured goods. If Africans want cell phones (and they do), they need to keep exporting cobalt and other minerals to China in exchange.
The US problem is that we are exporting IOUs in exchange for real goods. What happens when China announces that henceforth Walmart will have to pay in Yuan for its imports? When Imperial China told the English they would accept only silver in exchange for exports of tea, silk, etc, the English responded by launching the Opium Wars. That is probably not an option for Walmart.
Nobody has the coercive options that were available to the West to enforce their will back in the day–that’s the point.
I’m glad you mentioned the Opium Wars. It seems the Chinese have flipped the script, and now export it to the US along with all the plasticrap.
I can’t answer your question about Walmart and Yuan. What do you think?
Cousin Eddie
Walmart & Yuan?
My base assumption is that the Chinese Communist Party has been waging economic war against the West — and specifically the US — for more than a decade. Maybe China just stumbled into this when they realized how willing the West was to transfer production to them? Or maybe it was part of a long-range CCP plan? Who can say?
Am I certain that the CCP is waging economic war? NO! But it is the parsimonious explanation of a lot we see happening.
China takes the “Century of Humiliation” imposed on them by the English & Japanese very seriously, and they tell anyone who listens they are not going to let it happen again. Thanks to bought politicians and foolish industrialists, the US is very exposed because we now depend on the willingness of China (& others) to accept IOUs in exchange for real goods. At some point, the CCP is going to take advantage of that weakness. Since the Chinese are smart & flexible, how they choose to take advantage of that US weakness will probably take us by surprise. Maybe Walmart, maybe medications, maybe something else.
All the CCP needs is for the US to get out of their backyard — they don’t need to conquer a country that has already surrendered much of its former industrial strength and has a totally corrupt political/academic/media system. When the US collapses economically and is gone as a backstop and ally, Taiwan, Japan, Korea, Australia, etc will all fall into line. Then the CCP has the security it is seeking.