Wednesday, September 26, 2018

Keyu Jin — What China Can Gain from Trump’s Trade War

An unintended outcome of US President Donald Trump's trade war is that China will reduce its reliance on foreign trade and imported technologies. The end result could be a China that is stronger, more resilient, and possibly less willing to acquiesce to US-designed rules.
No brainer. I've been saying this since the beginning of the so-called trade war. Like Russia, this is just forcing China to speed up what it was already committed to do in becoming more self-sufficient and developing the domestic economy through import substitution and restructuring the economy to increase production for domestic consumption instead of export. Not that China will cease being an export powerhouse by any means, but it will reorient exports more toward the emerging world instead of the developed world.

It will also greatly speed up the the development of the military-industrial complex, as it also has it Russia, accelerating the arms race and worsening Cold War 2.0.

The US is creating the adversaries it should most fear. In hindsight, this will be viewed as one of greatest strategic blunders in history, if there is still a future in which to reflect upon it should this result in a nuclear WWIII.

The upside is that all the military spending will stimulate "growth," and it will also likely lead to new technologies with civilian application, in particular AI, which has become the new "holy grail."

Project Syndicate
What China Can Gain from Trump’s Trade War
Keyu Jin | tenured associate professor of economics at the London School of Economics, World Economic Forum Young Global Leader, a member of the Richemont Group Advisory Board, Beijing born and Harvard educated.

See also

Unrealistic model.

U.S. has most to lose from trade war, China would benefit: ECB


Andrew Anderson said...

Non-negative yields/interest on the inherently risk-free debt of a monetary sovereign like the US are not only immoral (since they are welfare proportional to account balance) but they also encourage foreigners to save US dollars rather than import more from or export less to the US or, if that should be allowed*, invest in the US.

*We don't need more rentiers, that's for sure.

Andrew Anderson said...

Of course if we had had ethical finance all along, instead of providing what is, in essence, the public's credit but for private gain, then having a job would be far less important in the first place.