Alexei Gladkikh
Marxist economist for 40 years.Updated 2y
Is China indeed "losing the trade war in every way" as per Forbes? Is this simply wrong? How will this end?
I would suggest something I believe, based on all Chinese statements and my understanding of the economy.

China intent to “lose” Trade war.

China self-proclaimed purpose is to become a consumer society. It’s leaders constantly express that in statements and actions. China median wages grow very fast and policies of government encourage that growth.

China trying to balance its payment surplus by mass foreign investment, in a way they do their marshal plan. Yes, they do try to secure a market for there raw materials and consumer goods, but that is only one component. Prolonged payment surplus of one country on others is unsustainable and destructive to both, surplus and deficit countries. It accumulates debt and eventually, this debt becomes unsustainable, customers can not borrow any longer and can not continue to be customers. So, you have to recycle your surplus, most helpful for both sides in form of direct investments. This way, the recipient country does not accumulate debt and you got a reliable source of raw materials and customer for your goods.

Keynesians economists understand that. Keyness propose auto balancing worldwide payments system, based on an international currency not linked to any country, Banker. The US rejected this system, in favor of $US become the world reserve currency. That was based on believing that the US will never lose it’s trade and payments surplus. It's manually recycled their surplus in form of Marshal plan and other investment actions and by using the money to impose its political order on the rest of the world.

in 1971 this system collapse and the US establish a new system. It does not matter who’s surplus we recycling, so long we do recycling. Using petrodollar the US forced the rest of the world to use $US as the world reserve currency. That let the US continue to finance its economy by printing money for the rest of the world, in form of US government debt and pure printing. That continues to feed the US as a consumer society and US military power.

In 2008 that system collapse. That show the Chinese that they can no longer rely on the US to recycle its trade surplus. They have to do it’s manual, themselves. One belt one road was born + all other investment projects. Chinese foreign investments jump. But that can not continue forever. The Chinese need to jump up their own consumption. Increase their worker wages, make economy mostly internal and balance their international payments.

So, China and Trump will do there dance, the show must go on. China will “cave” on technology transfer. They do not need it anymore, they develop enough to do there own development. Huawei case is an example.. All bans are just reflected fact that west lost the technological competition. Huawei 5G smartphones already on market and for 2/3 of the price of Apple 4G smartphones. 5G networks 10 times faster than 4G, entering the world in a new jump of innovation.

And by banning Huawei west will lose it’s technological edge even faster.

Now, Chinese have to do a very fine balancing act, something no country ever has done, convert their economy in like 10 years into the balanced consumer economy. All that western antagonism does not help, but the world economic future depends on how China does this transformation.

In 2008 the world avoided 1929 depression by global coordinated actions. The Chinese did their part and increased their internal consumer debt by 40% in 1(ONE) year, building “Ghost” cities. So, their workers continue to produce, industries continue to consume raw materials and buy them from the rest of the world. That eventually pull out the world economy from recession. They can not repeat this trick and in 2008 roots of economic problems were not resolved, but just postponed.

The incoming recession will need a globally coordinated response and all these trade wars do not help. I am afraid that the world will regress into isolationism and repeat the pain of 1929–1941 great depression, with all other negative aspects you can see in history

Edit:

I receive multiply comments stating that all China do is act in it self interest. That is my reply:

Does China operate in self interest? Yes. But as a growing power it operate rationally.
Lets compare China Reaction to Obama.
China tell there Banks, lend or else, greatly increasing amount of private debt in Chinese economy. Result was, Chinese workers got jobs they lost because export stop. Result was workers in Australia, Brazil, Africa did not loose there jobs because China continue to buy raw materials. Result was that credit flow did push world out of recession. Was it in interest of china? Yes. Did it saved capitalism? Yes. Did china had choice how to do that? Yes. China for example was able to print money and simple give to workers. Create unemployment program. Result on China workers would be probably same. Or China could directly employ workers to build cities and gift flats to workers.
Result to world would be the same. So, why China load up there economy with private debt, which is not a good idea? Because other 2 solutions lower value of yuan and went directly against capitalism philosophy, putting China in instant conflict with US. China was not ready for direct conflict with the US.

Now Obama Bail out Banks and companies by money printing on form of QE. Did it saved Capitalism? Yes. Did that push world out of recession? No. Consumers did not get more money, so production become even more supress as Middle class were loosing houses. Did Obama had a choice? Yes, He could bail out home owners directly. To use QE to buy Housing debt from banks and forgive it. That would bail out banks and it would bail out America Middle class. Not poor, Middle class. And it would have restore consumption, pushing world out of recession.

Why he did not? For pure ideological reasons. Because foreclosing houses is extremely profitable for banks, create a huge opportunity to make profit, redistribute wealth from middle to top. Rich were not able to let go of this opportunity. As result the rest of capitalist world, except China, follow.. Economy to be dam, we could be rich! That is irrational behavior, but predicted by Marx 150 years ago. When Capitalism have no where to expand it consume itself.

On 29/1/2022 1:53 am, Rusty Wyse wrote:
>
> Alexei Gladkikh
> Marxist economist for 40 years.Updated 2y
> Is China indeed "losing the trade war in every way" as per Forbes? Is this simply wrong? How will this end?
> I would suggest something I believe, based on all Chinese statements and my understanding of the economy.
>
> China intent to “lose” Trade war.
>
> China self-proclaimed purpose is to become a consumer society. It’s leaders constantly express that in statements and actions. China median wages grow very fast and policies of government encourage that growth.
>
> China trying to balance its payment surplus by mass foreign investment, in a way they do their marshal plan. Yes, they do try to secure a market for there raw materials and consumer goods, but that is only one component. Prolonged payment surplus of one country on others is unsustainable and destructive to both, surplus and deficit countries. It accumulates debt and eventually, this debt becomes unsustainable, customers can not borrow any longer and can not continue to be customers. So, you have to recycle your surplus, most helpful for both sides in form of direct investments. This way, the recipient country does not accumulate debt and you got a reliable source of raw materials and customer for your goods.
>
> Keynesians economists understand that. Keyness propose auto balancing worldwide payments system, based on an international currency not linked to any country, Banker. The US rejected this system, in favor of $US become the world reserve currency. That was based on believing that the US will never lose it’s trade and payments surplus. It's manually recycled their surplus in form of Marshal plan and other investment actions and by using the money to impose its political order on the rest of the world.
>
> in 1971 this system collapse and the US establish a new system. It does not matter who’s surplus we recycling, so long we do recycling. Using petrodollar the US forced the rest of the world to use $US as the world reserve currency. That let the US continue to finance its economy by printing money for the rest of the world, in form of US government debt and pure printing. That continues to feed the US as a consumer society and US military power.
>
> In 2008 that system collapse. That show the Chinese that they can no longer rely on the US to recycle its trade surplus. They have to do it’s manual, themselves. One belt one road was born + all other investment projects. Chinese foreign investments jump. But that can not continue forever. The Chinese need to jump up their own consumption. Increase their worker wages, make economy mostly internal and balance their international payments.
>
> So, China and Trump will do there dance, the show must go on. China will “cave” on technology transfer. They do not need it anymore, they develop enough to do there own development. Huawei case is an example. All bans are just reflected fact that west lost the technological competition. Huawei 5G smartphones already on market and for 2/3 of the price of Apple 4G smartphones. 5G networks 10 times faster than 4G, entering the world in a new jump of innovation.
>
> And by banning Huawei west will lose it’s technological edge even faster.
>
> Now, Chinese have to do a very fine balancing act, something no country ever has done, convert their economy in like 10 years into the balanced consumer economy. All that western antagonism does not help, but the world economic future depends on how China does this transformation.
>
> In 2008 the world avoided 1929 depression by global coordinated actions. The Chinese did their part and increased their internal consumer debt by 40% in 1(ONE) year, building “Ghost” cities. So, their workers continue to produce, industries continue to consume raw materials and buy them from the rest of the world. That eventually pull out the world economy from recession. They can not repeat this trick and in 2008 roots of economic problems were not resolved, but just postponed.
>
> The incoming recession will need a globally coordinated response and all these trade wars do not help. I am afraid that the world will regress into isolationism and repeat the pain of 1929–1941 great depression, with all other negative aspects you can see in history
>
> Edit:
>
> I receive multiply comments stating that all China do is act in it self interest. That is my reply:
>
> Does China operate in self interest? Yes. But as a growing power it operate rationally.
> Lets compare China Reaction to Obama.
> China tell there Banks, lend or else, greatly increasing amount of private debt in Chinese economy. Result was, Chinese workers got jobs they lost because export stop. Result was workers in Australia, Brazil, Africa did not loose there jobs because China continue to buy raw materials. Result was that credit flow did push world out of recession. Was it in interest of china? Yes. Did it saved capitalism? Yes. Did china had choice how to do that? Yes. China for example was able to print money and simple give to workers. Create unemployment program. Result on China workers would be probably same. Or China could directly employ workers to build cities and gift flats to workers.
> Result to world would be the same. So, why China load up there economy with private debt, which is not a good idea? Because other 2 solutions lower value of yuan and went directly against capitalism philosophy, putting China in instant conflict with US. China was not ready for direct conflict with the US.
>
> Now Obama Bail out Banks and companies by money printing on form of QE. Did it saved Capitalism? Yes. Did that push world out of recession? No. Consumers did not get more money, so production become even more supress as Middle class were loosing houses. Did Obama had a choice? Yes, He could bail out home owners directly. To use QE to buy Housing debt from banks and forgive it. That would bail out banks and it would bail out America Middle class. Not poor, Middle class. And it would have restore consumption, pushing world out of recession.
>
> Why he did not? For pure ideological reasons. Because foreclosing houses is extremely profitable for banks, create a huge opportunity to make profit, redistribute wealth from middle to top. Rich were not able to let go of this opportunity. As result the rest of capitalist world, except China, follow. Economy to be dam, we could be rich! That is irrational behavior, but predicted by Marx 150 years ago. When Capitalism have no where to expand it consume itself.

Regardless of how much is analyzed here which is mostly the past, China
now learned its lessons in not to trust all their baskets of trades and
businesses when working with dishonorable countries which advocated all
aspects of free trade aspect of sales, purchases, innovations,
productions, and others, but have had now heading their into many
blockages to curtail the economy of other countries for their own
benefits of slowing other down because they could not work with other
countries, too. Now the whole world knows America is solely the one
working against other countries, instead.

On 29/1/2022 1:53 am, Rusty Wyse wrote:
>
> Alexei Gladkikh
> Marxist economist for 40 years.Updated 2y
> Is China indeed "losing the trade war in every way" as per Forbes? Is this simply wrong? How will this end?
> I would suggest something I believe, based on all Chinese statements and my understanding of the economy.
>
> China intent to “lose” Trade war.
>
> China self-proclaimed purpose is to become a consumer society. It’s leaders constantly express that in statements and actions. China median wages grow very fast and policies of government encourage that growth.
>
> China trying to balance its payment surplus by mass foreign investment, in a way they do their marshal plan. Yes, they do try to secure a market for there raw materials and consumer goods, but that is only one component. Prolonged payment surplus of one country on others is unsustainable and destructive to both, surplus and deficit countries. It accumulates debt and eventually, this debt becomes unsustainable, customers can not borrow any longer and can not continue to be customers. So, you have to recycle your surplus, most helpful for both sides in form of direct investments. This way, the recipient country does not accumulate debt and you got a reliable source of raw materials and customer for your goods.
>
> Keynesians economists understand that. Keyness propose auto balancing worldwide payments system, based on an international currency not linked to any country, Banker. The US rejected this system, in favor of $US become the world reserve currency. That was based on believing that the US will never lose it’s trade and payments surplus. It's manually recycled their surplus in form of Marshal plan and other investment actions and by using the money to impose its political order on the rest of the world.
>
> in 1971 this system collapse and the US establish a new system. It does not matter who’s surplus we recycling, so long we do recycling. Using petrodollar the US forced the rest of the world to use $US as the world reserve currency. That let the US continue to finance its economy by printing money for the rest of the world, in form of US government debt and pure printing. That continues to feed the US as a consumer society and US military power.
>
> In 2008 that system collapse. That show the Chinese that they can no longer rely on the US to recycle its trade surplus. They have to do it’s manual, themselves. One belt one road was born + all other investment projects. Chinese foreign investments jump. But that can not continue forever. The Chinese need to jump up their own consumption. Increase their worker wages, make economy mostly internal and balance their international payments.
>
> So, China and Trump will do there dance, the show must go on. China will “cave” on technology transfer. They do not need it anymore, they develop enough to do there own development. Huawei case is an example. All bans are just reflected fact that west lost the technological competition. Huawei 5G smartphones already on market and for 2/3 of the price of Apple 4G smartphones. 5G networks 10 times faster than 4G, entering the world in a new jump of innovation.
>
> And by banning Huawei west will lose it’s technological edge even faster.
>
> Now, Chinese have to do a very fine balancing act, something no country ever has done, convert their economy in like 10 years into the balanced consumer economy. All that western antagonism does not help, but the world economic future depends on how China does this transformation.
>
> In 2008 the world avoided 1929 depression by global coordinated actions. The Chinese did their part and increased their internal consumer debt by 40% in 1(ONE) year, building “Ghost” cities. So, their workers continue to produce, industries continue to consume raw materials and buy them from the rest of the world. That eventually pull out the world economy from recession. They can not repeat this trick and in 2008 roots of economic problems were not resolved, but just postponed.
>
> The incoming recession will need a globally coordinated response and all these trade wars do not help. I am afraid that the world will regress into isolationism and repeat the pain of 1929–1941 great depression, with all other negative aspects you can see in history
>
> Edit:
>
> I receive multiply comments stating that all China do is act in it self interest. That is my reply:
>
> Does China operate in self interest? Yes. But as a growing power it operate rationally.
> Lets compare China Reaction to Obama.
> China tell there Banks, lend or else, greatly increasing amount of private debt in Chinese economy. Result was, Chinese workers got jobs they lost because export stop. Result was workers in Australia, Brazil, Africa did not loose there jobs because China continue to buy raw materials. Result was that credit flow did push world out of recession. Was it in interest of china? Yes. Did it saved capitalism? Yes. Did china had choice how to do that? Yes. China for example was able to print money and simple give to workers. Create unemployment program. Result on China workers would be probably same. Or China could directly employ workers to build cities and gift flats to workers.
> Result to world would be the same. So, why China load up there economy with private debt, which is not a good idea? Because other 2 solutions lower value of yuan and went directly against capitalism philosophy, putting China in instant conflict with US. China was not ready for direct conflict with the US.
>
> Now Obama Bail out Banks and companies by money printing on form of QE. Did it saved Capitalism? Yes. Did that push world out of recession? No. Consumers did not get more money, so production become even more supress as Middle class were loosing houses. Did Obama had a choice? Yes, He could bail out home owners directly. To use QE to buy Housing debt from banks and forgive it. That would bail out banks and it would bail out America Middle class. Not poor, Middle class. And it would have restore consumption, pushing world out of recession.
>
> Why he did not? For pure ideological reasons. Because foreclosing houses is extremely profitable for banks, create a huge opportunity to make profit, redistribute wealth from middle to top. Rich were not able to let go of this opportunity. As result the rest of capitalist world, except China, follow. Economy to be dam, we could be rich! That is irrational behavior, but predicted by Marx 150 years ago. When Capitalism have no where to expand it consume itself.

Trade war is dependent on every country engaging in them. If one America
is engaging trade war, it is like drowning in their own well.