President Bannon and China

It appears that the trade war has already started with China.  Evidently, President Bannon actually believes that imposing tariffs on imports from China will injure the Chinese economy enough so as to bring China to its knees and to cause China to cease manipulating its currency to make its exports attractive to customers in the United States.  Good luck!  Amongst a plethora of flaws, one of the fatal flaws with your theory, President Bannon, is: China is not acting to weaken its currency as against the United States Dollar; in fact, it is doing exactly the opposite.  Of course, a bloviating NAZI could not be expected to understand the nuances of international exchange rates or any thing not related to hate.  President Obama imposed a tariff in excess of 250% on Chinese steel imported into the United States.  The result: nothing!  China was not injured, and the customers in the United States continued to import Chinese steel.  This is because the workers in the United States cannot compete with the workers in China and it is in the best of China to lower the price of steel and to continue shipping its steel into the world markets so as to keep its workers employed.  The government of China is doing this to maintain social stability and its 7%-plus annual growth rate.  Oh, by the way, the workers in Australia are more than happy that the Chinese are exporting cheap steel into the world market.  Of course, if the United States did not have its head in a place where the Sun never shines, we could be exporting iron ore from Minnesota to China.  So, China just imports iron ore from Australia.

There is a far more critical point to be borne in mind, President Bannon, as you commence a trade war with China:  exports from China to the United States amount to no more than about 16% of the economy in China.  For decades now, China has been smart enough to have been using what is called “soft diplomacy”: which means that it has been funding infrastructure projects throughout the third world.  This has set the stage for China to export its goods and services to those growing third world countries to more than offset any consequences of a trade war with the United States.  Think of this, President Bannon: there are over a billion people on the African Continent living on less than about $1.00 per day.  These people want to be in the “middle class” and enjoy all of the benefits of that status, just like the “middle class” in the United States has enjoyed since Truman slept in the White House.  China certainly realizes that if you take a billion people and increase their economic activity within a decade to a level equal to, say, $50,000 per year per person, the size of the African economy will exceed $50 Trillion dollars per year.  Just so you know, that will dwarf the economy of both China and the United States.

Of course, China recognized this long ago: the United States has sat back on its laurels believing that it is the king of the hill.  The response of the Bannon Administration is to start trade wars, become isolationist, and impose a NAZI regime upon the citizens of the United States.  To me, that sounds like a really dumb thing to do.  Mr. Bannon, the Chinese are a lot smarter than you when it comes to economics and international trade.  They do not need us, we need them.

I hope that this helps.

Nathan A. Busch

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