The US may take the early victories in the trade war with China, but over the long haul the Chinese could win. From John Mauldin at mauldineconomics.com:
With all the trade war talk, we all ask the obvious question: Who will win? President Trump says the US will win. Chinese business leaders say no, we will win. Free-traders on both sides say no one will win. Few stop to ask, “What does a ‘win’ look like?”
This makes discussion difficult. People are chasing after a condition they can’t even define. Victory will remain elusive until they know what they want. Regardless, you can score me on the “no one wins” side. I believe, and I think a lot of evidence proves, that free trade between nations is the best way to maximize long-run prosperity for everyone.
Are the Chinese settling in for a long fight in the trade war with the US? From Pepe Escobar at atimes.com:
Trade tensions between the US and China could drag on for decades but China’s focus on its Belt and Road Initiative could provide relief
We might be at the start of a decades-long trade war between China and the US. Photo: iStock
Alibaba’s Jack Ma has warned that the ongoing US-China trade war could last at least 20 years. As we’ll see, it’s actually more like 30 – up to 2049, the 100th anniversary of the foundation of the People’s Republic of China (PRC).
Steve Bannon always boasted that President Trump was bound to conduct a “sophisticated form of economic warfare” to confront China.
The logic underpinning the warfare is that if you squeeze the Chinese economy hard enough Beijing will submit and “play by the rules.”
The Trump administration plan – which is, in fact, trade deficit hawk Peter Navarro’s plan – has three basic targets:
- Displace China from the heart of global supply chains.
- Force companies to source elsewhere in the Global South all the components necessary for manufacturing their products.
- Force multinational corporations to stop doing business in China.
Hats off to the geniuses who believed the best US foreign policy was to drive a wedge between China and Russia. It worked well; they are getting closer by the day. From Tyler Durden at zerohedge.com:
Presidents Vladimir Putin and Xi Jinping met on the sidelines of the Eastern Economic Forum in Vladivostok on the Sino-Russian border Tuesday. Simultaneously Russia and China kicked off unprecedented joint military exercises as part of Russia’s annual Vostok war games, which will run for a week and includes thousands of Chinese People’s Liberation Army troops, and some 300,000 Russian personnel.
President Putin has of late sought closer relations with China, which Russia shares a massive 4,200km border with, amidst both countries experiencing deep tensions with the West, including US sanctions against Moscow and a growing trade war between China and Washington.
It’s the third time this year the two leaders have met and the fact that it was planned at the inauguration of Vostok 2018 no doubt sent a strong signal to Washington that the two countries’ usually chilly relations are warming fast in the face of a common increased threat from the West. Continue reading
The US is trying to beat China and Russia on their home court. The US is relying on bullets and bombs as its “persuaders,” while China and Russia are relying on infrastructure development, arms sales, trade, and financing on preferential terms. Guess who’s winning? From Federico Pieraccini at strategic-culture.org:
The operation of the Syrian Arab Army in the province of Idlib represents the last step of the central government of Damascus in the liberation of the country from the scourge of Islamist terrorism. With the defeat of Daesh and the removal of the remaining pockets of resistance, Assad’s soldiers have accomplished an extraordinary task. Meanwhile, the United States continues its illegal presence in Syria, through its support of the SDF in the north of the country for the purposes of sustaining the destabilizing potential of terrorist networks in the region and beyond. In light of this unfavorable situation for the Americans, it is easy to explain the transfer of commanders and high terrorist spheres from Syria and Iraq to Afghanistan, as confirmed by several official Russian, Iranian, Syrian and Iraqi sources.
The logic behind such a move has everything to do with the ongoing process of Eurasian integration. Progress in this regard has been multifaceted in recent months and years. It ranges from the most important event, namely the entry of Pakistan and India into the Shanghai Cooperation Organization (SCO), to other less known events, such as the signing of the Caspian Sea treaty by Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan. The United States is committed to stopping this integration. Staying true to Brzezinski’s grand strategy, based on the concepts of Heartland and Rimland, it has not been difficult for policy makers and advisors of the current US administration to understand the importance of Afghanistan in helping the process of Eurasian integration by fomenting terrorism. Afghanistan plays an important double role as a hinge between both Eurasia and the Middle East and the Persian Gulf. Continue reading
Posted in Economics, Economy, Eurasian Axis, Geopolitics, Governments, Investing, Trade
Tagged Afghanistan, Belt and Road Initiative, China, India, Iran, Pakistan, Russia, Syria, Turkey
Is China’s economy hitting the great wall? From Wolf Richter at wolfstreet.com:
First sign: auto sales suddenly plunged.
The Chinese government legalized peer-to-peer lending platforms in 2015. P2P sites attract money from individual investors – mostly savers – by offering them extraordinarily high yields. They lend this money at high interest rates to borrowers who have trouble getting loans elsewhere – classic subprime. By the end of 2017, there were over 8,000 P2P platforms, according to the People’s Bank of China, with over 50 million registered users. By the end of June, in a little over two years, the industry had gone from zero to $190 billion in outstanding loans.
That was the peak. But the fun didn’t last long. Borrowers defaulted on their loans or just absconded with the money, and the platforms began collapsing. In May this year, regulators stepped in. By the end of July, 4,740 P2P lenders had collapsed or where shut down. Continue reading