Quora: Is China frustrated with the U.S. trade war?

Johnny Fung, Entrepreneur with businesses in China and US answered.

I believe the Trump team is extremely frustrated with the war they can’t win. Since the trade war started a year ago, Trump has called Xi 3 times trying to make deals.

The Chinese are extremely patient. They are preparing 5 to 10 years or even up to 25 years into the future. The US only concentrates on issues every 4 years.

At the beginning of the trade war, China was quite nervous since no one knew the outcome, and Chinese leaders predicted a 1.5 -2% GDP hit. However, after one year, China is standing, and still grows by more than 6%, which comes from deleveraging! The US economy is worse than it actually looks. It is boosted by debts. 40 years ago, debt was a good thing for the US economy because each $1.00 GDP increase cost the US less than $0.50 debt. However, now the US has to use $4.00 debt to generate $1.00 GDP increase. It is clearly unsustainable. That is why Trump has been printing more money, but the resulting GDP increase is very small. In fact, the US will see sub 2% GDP within 6–9 months.

There is also the stock market indicator for both countries. China’s stock value is less than 10% of national wealth, but US’s is 80%. In other words, the US can’t have a big downward trend on stock market. Trump is forcing the FEDs to lower the interest rate, mainly to boost the stock market. By the end of 2020, US stock indices will have another high, then we will see US financial market entering a long term downward trend. Gold will continue increasing in value along with other precious metals.

It is also important to know that for the PPP (Purchase Power Parity) GDP, China already bypasses the US in 2018, standing at 130% of US’s. After another 10 years, it will be 300%.

Chinese leaders are extremely smart on math. Lol, they know what to look for, and prepare China for the worst case scenario.

China is also producing 20 times the engineers that the US is. In 2018, China graduated more than 8 MM college educated students, more than half are engineers; US graduated 440K engineering degree students, but with 52% are foreign students from China and India, US only had 200K domestic educated engineers, mainly Chinese American and Indian American.

If I were US, I would have many sleepless nights.