Mas Miwa, former Engineer at Hughes Space and Communications
Answered
The results may end up the same, but I have a different view. There are two things holding back an agreement.
First is ‘Made in China 2025’ which is important for China because it is China’s plan to rise in technology and move away from labor-intensive cheap labor exports, it follows Germany’s plan ‘Industry 4.0’. Interesting that Trump wants to stop China’s rise, but not Germany’s rise in technology.
Second, Trump wants China to change its political structure from its socialist architecture to a more capitalist democratic structure. Again China refuses because already 60% of its GDP rise is from the private sector, not the SOE. Their structure has in one generation , brought China from poverty to second in GDP only to the US. It has moved 500 million of its people out of poverty. With such a success, why would it change?
Since China won’t capitulate on those two points, the results will cause an economic downturn because Trump chooses to do so. If it were purely a trade war, China has already conceded that it will buy more American goods, but it should be obvious, this trade war is not about trade. Having said that, in spite of his tariffs, the trade deficit with China has only increased, not gone down. His subsidies to farmers exceed what he has gotten in tariff revenues, so our national debt keeps increasing.
So, no closure is in sight for the trade negotiations and his tariffs are not improving the trade deficit nor our national debt. I would say, on balance, he is losing to China and the US will incur more damage than China. Bottom line, China continues to improve on increasing trade exports and more surplus, the US is in limbo with its trade war and its tariffs have made its deficit greater.
Answered
The results may end up the same, but I have a different view. There are two things holding back an agreement.
First is ‘Made in China 2025’ which is important for China because it is China’s plan to rise in technology and move away from labor-intensive cheap labor exports, it follows Germany’s plan ‘Industry 4.0’. Interesting that Trump wants to stop China’s rise, but not Germany’s rise in technology.
Second, Trump wants China to change its political structure from its socialist architecture to a more capitalist democratic structure. Again China refuses because already 60% of its GDP rise is from the private sector, not the SOE. Their structure has in one generation , brought China from poverty to second in GDP only to the US. It has moved 500 million of its people out of poverty. With such a success, why would it change?
Since China won’t capitulate on those two points, the results will cause an economic downturn because Trump chooses to do so. If it were purely a trade war, China has already conceded that it will buy more American goods, but it should be obvious, this trade war is not about trade. Having said that, in spite of his tariffs, the trade deficit with China has only increased, not gone down. His subsidies to farmers exceed what he has gotten in tariff revenues, so our national debt keeps increasing.
So, no closure is in sight for the trade negotiations and his tariffs are not improving the trade deficit nor our national debt. I would say, on balance, he is losing to China and the US will incur more damage than China. Bottom line, China continues to improve on increasing trade exports and more surplus, the US is in limbo with its trade war and its tariffs have made its deficit greater.
No comments:
Post a Comment