Why China Is Winning the Trade War

You wouldn't tariff raw material inputs if you wanted to revive manufacturing. The cost of metals alone is hurting lots of American businesses right now

It's not supposed to be positive. Trump has a mental illness that causes him to want to destroy everything not related to himself.

> the potential positive result is here for the US

The central campaign promises were to reverse the demographic changes of the last few decades, at the costs of making Americans poorer & reducing America's long-term competitiveness and economic growth. The administration is delivering exactly what voters were promised.

The "positive result" that voters chose here was a reversion in demographic changes.

The uncomfortable reality here is that the Chinese are simply better than us at most things. But simply surrendering all of our core industries is not a viable plan for any country. This puts the US in a difficult position. We are loosing the trade war, but if you recall during Covid we were also unable to secure a lot of basic medical supplies because of this dependence on a non-aligned foreign power. So unless you assume that the CCP are suddenly outstandingly altruistic then you could reasonably prefer losing a trade war to being rendered a vassal state. There might be better ways to avoid this fate, but given the magnitude of China’s advantages right now I am not sure that these are going to be much better. There will be a lot of pain from these tariffs, but doing nothing is also going to cause a lot of pain.

It's a sorry state of affairs for a country when the materials needed for its weaponry must be imported from its most potent rival.

Or when a significant portion of its medicines are manufactured outside its jurisdiction.

Let's just hope the USA doesn't follow Japan's precedent for raw material acquisition.

> It wants to build a Chinese-led system on the ruins of the old liberal trading order, one which will rival Mr Trump’s empire of tariffs. Already China has shifted the geography of its trade: in the year to September its goods exports grew by over 8%, even as those to America fell by 27%.

That's fine, but it's not just China and US here. The EU is also making moves.

The reality is that it would be malfeasance for the steward classes in the EU and China to not at least try to replace the US in the face of the recent US missteps. So China and the EU will both be trying to be the reliable and responsible big dog. Which will most likely lead to some kind of multipolar world where the prestige and power of the US is greatly diminished. But it doesn't necessarily translate into automatic Sino-pax.

Sino-pax is definitely one of the possible outcomes. It's even likely, but not a foregone conclusion. So their current moves and bets will very likely pay off, but maybe not as big as they think those moves and bets will pay off.

We have been assured that short-term pain will turn into long-term gain. Unfortunately, politicians never play the long game; only the citizenry does, by force.

The US can make stuff, and up until Trump took office it was going through the most massive expansions of factory capacity it has seen since the post WW2 boom.

However this year seems to be trying to cancel all those big wins. We do have chip manufacturing, but since most of the battery, solar panel, and EV factories went into largely Trump-voting areas, they are all at risk since they are politically disfavored technologies.

With plentiful energy and a scalable supply chain it would be easy to recover using robots and AI. But the West's leadership has been destroying both for decades. And I mean both sides in most Western countries (Republicans/Democrats, Tories/Labour, etc).

"Madness. Madness and stupidity."

Pretty much - the US spends more on it's military than the next 9 countries combined where the Chinese produce more than the next 9 countries combined.

So if the US is a military superpower then China is a manufacturing superpower.

Anyone who knows history knows how dangerous it is to fight someone who can out produce you even if you start with a military advantage (WWII - Japan and US, Yamamato knew it well)

> "In the first six to twelve months of a war with the United States and Great Britain I will run wild and win victory upon victory. But then, if the war continues after that, I have no expectation of success" - Yamamato.

If the US had continued business as usual they could have divided the world between them but they seem determined to burn every possible bridge they can and live in splendid isolation - which is great except if you are running a massive imbalance on physical goods...

China doesn't really have to do anything to "win" on the international stage - when your enemy is making a mistake don't interrupt him applies and they have their own issues at home.

Have you actually read the Economist?

The Economist has always been the mouthpiece for the financial interests of the Cadbury & Rothschild families. There isn't a banking uber alles status quo they won't support.

There was a 2016 study looking at cover stories from The Economist that found it was a negative indicator (i.e., the opposite played out) within 1 year 68% of the time. Plenty of counterexamples though.

Biden?

The day the US isn't the top economy, the status of the dollar is threatened and that's the top reason why the US is where it is in the first place.

China is clearly aiming to take over Taiwan, and if they can't do it peacefully they are building up a military that can do it. America should be afraid of that.

China clearly support Russia in their war on Ukraine despite pretending neutrality. Europe should be afraid.

China is doing lots of other geopolitical things that you should be afraid draws you in.

> What is America so afraid of?

Everything. The whole empire exists on the basis of exploitation, and existence of enemies. The US military industrial complex has immense power, and it needs a reason to exist, and keep existing.

One global hegemon is bad enough, then we'd have two!

But actually it will be embarrassing when China puts an end to the "freedom of navigation" of all those US Navy ships circling their borders.

Unfortunately it will lead to further manipulation, as nobody can accept it's their fault. The world is in terrible shape.

Did they really vote for that? I'm not American but have been quite surprised by the ever changing Trump tariff lottery. Brexit on the other hand was kind of predictable.

Unfortunately brexit meant that a hell of a lot of people behind the scenes scrambled to keep life running as usual, so that brexiteers could just say "See? Everything's fine"

People can be trained, legal obstacles can be removed and yeah it'll be expensive if they choose to do it.

That said if Putin went completely off the deep end and invaded eastern Europe you'd be amazed how fast planning laws on building stuff went out the window - Democratic governments can move fast when they have to but tend towards inaction when they don't.

It's also quite entertaining to just write off Western Europe based on resource availability - China itself is quite poor on natural resources (which is why they've played the long game in Africa so well, they get resources and build a market to sell manufactured goods to at the same time - it's been masterful realpolitik from them).

There is always a way out and Europe is starting from an advanced spot. Japan went from a isolated medieval country with very little resources except for people and became an industrial power in 40 years.

The trick is to not treat it like a zero sum game and to realise that to live a middle class life in America/Europe is to live life of luxury that almost nobody in human history could ever have dreamed of.

> it put too many legal obstacles regarding ecology,

The biggest problem isn't ecology. It is labor regulation.

One example: Apple handled all its manufacturing to FoxCon because workers committing suicide in their factories is a FoxCon's problem hidden in Shenzhen, it isn't Apple's problem.

Another example: you can't have German companies starting huge projects because in Germany you just can't do the massive firings that Microsoft, Meta and AWS do when these projects fail.

And the list goes on to infrastructure and land rights. Building a pipeline from Canada to the Gulf of Mexico, passing through farm land? Even Republicans would get scared of that.

The truth is that building physical stuff is very hard on the people that do it and sometimes even dangerous.

What's stopping China from repeating the US mistakes? Wages get too high, move manufacturing to cheaper countries, and the cycle repeats.

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> There is no fixing this. The west cannot afford to start industrialising because it lacks skilled manual labour, it put too many legal obstacles regarding ecology, the costs are astronomical which makes it unviable form day one, and most importantly - it lacks cheap energy which is absolutely crucial to have a blossoming heavy industries.

I enjoy doomerism as much as the next person, but honestly those all seem like incredibly fixable things that just require the right policy changes and sustained investment. Western countries certainly have the democratic government systems and financial resources necessary to do those things if they so choose.

Very hard but not impossible.

The past 50 years of American economic policy has basically been "look how much money we can make if every other country acts against its own interests indefinitely".

China is the idea-mine for western services these days too.

I for one enjoy my cushy white collared job and breathing air with little pollution. China has it's own very difficult problems that they have to deal with. Consumer demand is low for their economy, their birth rate is even lower than Japan's, and the finances of a lot of local governments are held together by some very opaque threads.

Oh, it's worse than that. The companies who moved production overseas are the ones who taught them the advanced manufacturing technologies necessary to make the now offshorn products (looking at you, Apple).

While being able to walk into a Walmart and buy a microwave for $20 is good for 'society' its not so good if you want to onshore microwave production and have to compete against these 'Everyday Low Prices' coming in from overseas.

Yes people were complaining in the late 1990s about large plants being bought by the Chinese and then the Clinton administration allowing 20k visas for the Chinese workers to take the plant apart and ship it to China.

> What Trump is doing may be too little too late but failure to assert anything would just be continuing to boil the frog. Given how pathetic the western elites are when their comeuppance arrives it will certainly be deserved.

Exactly. The globalization folks fucked this one up, and for some reason they're really set on sticking to their existing losing course. The root cause seems to be too much stale 90s ideology and short-term thinking on their part.

The problem with the "pathetic...western elites" getting their "comeuppance" is they'll actually make it out fine (they'll stay rich, but the rest of us will lose out more).

It worked for Hitler.

>> The final reason why China is winning is that the trade war has made Mr Xi and the Communist Party stronger, not weaker.

> I am not so sure of this. The CCP just had to go through a massive purge [0] on the top, right before elections. This is not an indicator of "stronger" position of a despot.

A despot that can pull of a purge is stronger than one who cannot, and purges might be necessary to keep people in line an maintain strength.

Purges are a product of strength.

PRC roboticizing more than RoW combined to PLUG bluecollar workforce gap, they're already short on manufacturing labour supply. Well rather kids don't want to assemble widgets. The goal is always to maintain current industrial base with fraction of headcount from demographic contraction, and by "100s millions" out of work, we're really talking about 10s of millions going to retirement and hopefully robots can keep the machine brrrting to replace productivity and drive down costs so system can caretake 10sm retirees with cheap goods - PRC manufacturing sector already down to like 120m from 250m high in 200s. Another 20m in next decade is easily absorbable. PRC just trying to keeping things steady, bad things are going to happen to every one else when they realize they don't have PRC industrial chains to replicate affordable abundance. It's going to extra screw developing economies now labour saving tech + US shifting away from global consumer via tariffs going to kill export-led model dead, and there really isn't another model on the horizon to replace it. VS west PRC going to weather fine at least longer for the simple reason they have stupid high household savings rate, this isn't leveraged US households living paycheck to paycheck that will lead to different tier of instability.

Lots of unemployed young males is a preindicator for war. Governments sometimes fear losing control and so will start a war to kill off the young males.