Guest post by Ted Malloch author of The Plot to Destroy Trump
When you have your opponent in an unbeatable hold and literally wrestle him to the ground, you only release him when he cries out — “uncle.”
Donald Trump now has China in such a position.
Chinese Communist leader Xi will cry out Shushu (‘uncle’ in Mandarin), anytime now.
Why?
According to Secretary of Commerce, Wilbur Ross, “China is out of bullets.”
It is out of ammo to retaliate because its imports to the US are 4 times larger than the US exports to China.
Do the math. Trump and his able-bodied Trade Representative, Robert Lighthizer have.
Peter Navarro, one of the President’s top trade advisors, said that China is in a “zero-sum game” with the rest of the world when it comes to trade. “We have to defend ourselves,” Navarro said, citing alleged Chinese theft of U.S. intellectual property on technology. “They’re attacking our crown jewels. They make no bones about it.”
Trump has also made it abundantly clear that as China plays this game of chicken against US farmers and industries we move to phase 3, which is “tariffs on approximately $267 billion of additional Chinese imports.”
This means ALL Chinese imports will be affected. The whole damn lot.
The US imported $505 billion worth of goods from China last year.
China is already suffering.
Its economy is contracting. Its export order index is falling steeply. Its currency is weaker. Its stock market has dropped by 20 per cent. Its non-performing loans are skyrocketing. Its growth rate is way off its normal numbers.
More tariffs will bite even harder.
Do you hear Shushu, yet?
Friends, it is time to tell the truth about Red China, a communist country with a pretend crony capitalism that is our foremost adversary, bar none.
The expansion of China’s international trade has been the most noteworthy aspect of China’s rising prominence in the world. China’s exports have grown at an average rate of 15 percent each year since 1979.
China is a predatory nation.
That has greatly benefitted China and hurt places like the Midwest and Europe.
Trade reforms and the general opening of China’s economy that have led to a surge in foreign direct investment and increased integration with the global trading system, especially since China joined the World Trade Organization in 2001, have facilitated this process.
Globalists promoted this and we have paid a dear price.
Given China’s very large population and still substantial development potential, as reflected by its current per capita income, China could have a bigger impact on the global economy than all the other Asian economies combined.
But will it, or will the bubble burst? Is China imploding?
Face the facts, China dumps its products, subsidizes its production, is rampant with corruption, and steals an estimated $600 billion a year in intellectual property from anyone who does business with them. And it employs slave labor.
They should be called out for what they are: cheats.
For decades after the 1949 revolution, Red China followed a policy of socialist economic development based primarily on the centrally directed allocation of resources through administrative means. By the late 1970s, this approach was increasingly recognized as being untenable and unsustainable, and an overhaul of the economic system was initiated.
But China’s approach to economic reform has been gradual and incremental, without any detailed liberalized “blueprint” guiding the process. This incremental approach is best depicted in a metaphor attributed to Deng Xiaoping as “crossing the river by feeling the stones under the feet” and is still applicable to many of the slow walked reforms being carried out by China today.
There is no freedom. China is not a democracy. There is no religious freedom and its ideology remains Marxist-Leninist-Maoist.
China continues a communist dictatorship playing with marketization. The two things are incompatible. Eventually they break apart.
Now Trump has called their bluff.
A great deal of recent debate has focused attention on China’s exchange rate regime.
China maintains a de facto fixed exchange rate regime, with the renminbi linked to the US dollar within a narrow trading band. China’s strong export growth, expanding market shares in major trading partner countries, and rapid accumulation of reserves have raised questions about whether the renminbi’s link to the US dollar may have resulted in an undervaluation of the currency.
Clearly, China does manipulate its currency to benefit its export-led regime.
The Chinese government faces a number of possible obligations associated with potential losses in the state-dominated banking system, the future funding requirements of the pension system, and rising expenditure pressures, especially for education, health, and other social programs. Resolving the substantial quasi-fiscal liabilities poses more than a significant challenge.
China could go bust, especially if it can’t export.
This challenge increases substantially as macroeconomic conditions, especially growth, become less favorable or if structural reforms are not forceful enough to prevent the accumulation of new contingent liabilities. This highlights the urgency of undertaking real reforms since many of these liabilities could otherwise pose an even greater burden in the future.
But domestic politics in China won’t let this happen.
China never does real reform or liberalization. It pretends to placate westerners. The Communist Party and its leader for life, dominate China. It has militarized the South China Sea imperiling trading routes and exerts its force anywhere it can to America’s detriment and demise. To date we have looked the other way.
China’s stock market is relatively thin, and there is a small corporate bond market. Banks have a crucial role in intermediating the substantial amount of private saving in China, which is estimated to be around one-third of total household income.
Bank lending has supported the high level of investment growth, which has made an important contribution to China’s growth performance in recent years. Stability of the banking system is therefore crucial for promoting sustained growth. Financial sector reforms undertaken recently highlight the challenges. The urgency of financial sector reforms has increased as domestic banks face intense competition under WTO accession commitments; the financial sector opened up to foreign banks in 2006.
Chinese banks appear to be increasingly insolvent and teetering on bankruptcy.
Many of the inefficiencies in the Chinese economy are ultimately manifested in labor market outcomes. Unemployment and “underemployment” of a significant portion of the rural population remain pressing concerns as the economy adjusts to the effects of state-owned enterprise reforms and WTO accession. Even with strong output growth, the unemployment problem has in fact worsened. The divide between rich and poor in China is as extreme as anywhere in the world.
Watch what happens next — as China collapses.
Yes, China boasts one of the longest single unified civilizations in the world.
All of us should have enormous respect for China’s rich, five-thousand-year history which has long been characterized by dramatic shifts in power between rival factions, periods of peace and prosperity when foreign ideas were assimilated and absorbed, the disintegration of empire through corruption and political subterfuge, and the cyclical rise of ambitious leaders to found each new empire.
For the last three hundred years China has seemingly more or less been asleep. Except that the horrible error and mistake of Mao’s disaster are all too evident today. (I have offered to help find funding for a Museum of Mao’s Killings, but China refused the offer.)
Wake up! Trump has.
China is still Red and is our preeminent enemy. We need to adjust our strategies in trade and in defense, accordingly.
It appears the sleeping dragon empire has indeed reemerged in a new dynasty. They think this is “their century.” They are on the rise and we are in decline.
Until they call out ‘uncle’ we cannot let them escape Trump’s hold.
The dragon has met its match in the American eagle.
