China Would Win If Trump Started An Economic War....#MirMak

China Would Win If Trump Started An Economic War....#MirMak

Campaign rhetoric and actually running a country are two different things. Specially when it comes to economies. How many times have we not seen hopeful Presidential candidates promise something on their campaign trail and take an absolute u-turn when they got into power. Because campaigns are run on perception. A perception is created that a candidate can change the reality. Voters buy that promise of the candidate being able to change the reality but reality is not changed based on perceptions, its the other way around.
Trump promised to turn China upside down on its head when it comes to dealing with it economically. People got excited, hoped for new jobs, increase in exports, decrease in Chinese imports, more jobs for the Americans, tougher import tariffs, stronger Chinese currency, reduction in Chinese global economic dominance, you name it and Trump promised it. Could he deliver ? Not even in a billion years. And this is why. None of the above promises have anything to do with making the lives of average middle class Americans better. An average American does not even understand how economies are run. They are mostly concerned with their taxes, healthcare benefits and vacation to the Caribbean islands. They do not understand that there is fundamental flaw in the American economic structure. American economy has grown based on its global power dominance. Not because of its superior quality of products or lower prices but rather it was a status symbol to but a Cadillac 40 years ago or to buy an iPhone today. But Cadillac has been replaced with Mercedes or Lexus and iPhone are being manufactured outside America.
Trump promised to impose a 45% tariff on Chinese imports. Really ? Did he not think for a second that China would also react with an iron fist. Firstly in the areas of education and tourism where Chinese students and travelers added a surplus of $28 billion dollars to the American industry. $28 billion is the surplus, the amount spent by Chinese in these two areas alone comes to hundreds of billions. Secondly one of the biggest areas of income for Hollywood is Chinese markets. The $200 billion a year industry can hit a brick wall if Chinese put a ban on American movies. Ralph Lauren, to Tommy Hilfiger to Tesla motors to whatnot, everything American would come under attack by the 1.4 billion consumers of China. Forget about Google and Microsoft or Oracle or Disney or GE or the food exporters of America.
Currency war, where America has repeatedly accused China of keeping its currency weak is nothing but a hollow threat. If China ever got serious and retaliated against America by beginning to sell $1.2 Trillion dollars of the American bonds it hold or $600 billion dollars of stocks that it holds, American economy would never recover and it will not make any difference to China even if they liquidated every penny of it. Before America could even think of imposing economic pressure on China, according to its own American law, China has to violate 3 conditions,
1. Bilateral trade surplus with America.
2. Material current account surplus above 3% of the GDP
3. Continuous manipulation by China of its currency.
These three things are not being violated by China, maybe one of them is but not all 3. So no power in the world can take any action, specially on the economic front when it comes to China. China is an economic reality that Americans are finding hard to accept and a reality so big that it will only get bigger. Instead of fighting an economic war that Chinese are great at and Americans are not, Trump only has a Choice of biting his tongue and making friends with China because Chinese leaders do not have to lie during their campaign trail, Chinese have no campaigning, thus they dont have to lie, they are only focused on delivering and that they have.
So Mr. Trump, your bluff is called even before you came into power. God bless American political candidates and their habit of misleading innocent voters.