No es una guerra de aranceles
que está a punto de ser concluida, sino un intento de dominar el mundo, de
estar uno por encima del otro…
This past weekend, June 29, 2019 Trump and
China president, Xi, met again at the G20 in Japan in the midst of a potential
further escalating trade war. But
the outcome looks eerily similar to that of the prior G20 meeting in Buenos
Aires on December 2, 2018, when Trump and Xi also met.
Once more, the same post-G20 ‘spin is in’: i.e. Trump declares publicly he has such
a great relationship with Xi. There’s a great trade deal soon forthcoming
between the two countries. US and China trade teams will now begin to thrash
out the details on the remaining 10% or so of US-China trade differences. In
the interim, once again, Trump announced he will withhold imposing more tariffs
(this time on an additional $325 billion of China imports to the US). In
other words, coming out of the latest G20 it’s almost an exact déjà vu all over
again to the outcome which occurred at last December 2, 2018’s G20 meeting
between Trump and Xi in Buenos Aires.
Will it be different this time? Will there by an agreement? Or will Trump
once again just be buying time—i.e. until just before the 2020 elections? Until
he sees China’s economy softening further and he raises US demands further
again? Or maybe Trump and his neocon trade advisers—Lighthizer, Navarro, Bolton
who are now driving US trade (and most of US foreign) policy—don’t want to
compromise and will accept nothing less than China’s capitulation on the
nextgen technology issue that was at the core of the blow up of
negotiations in May 2019?
It’s probably becoming increasingly clear
to the Chinese that the US did not just launch a ‘tariff war’ back in March
2018. US policy is driving toward a bonafide economic war between the US
and China longer term.
In the nearer term, the current
differences may well transform the ‘tariff’ war into a ‘currency war’ that will
spread contagion and reverberate globally across other economies—at a time at
which the global capitalist economy is slowing fast and approaching as well a
new financial instability. All China has to do is allow its currency, the
Yuan-Renminbi, to devalue naturally in response to US policy and the slowing
global economy. That devaluation would more than offset US tariffs. Thus
far, China has intervened in global money exchange markets to prevent this. But
all it needs to do is allow it to occur according to prevailing economic and
market forces and just not intervene in global money markets further to prop up
the Yuan. That will become inevitable as the China, US, and global economy
weaken further in coming months. China doesn’t have to manipulate its currency.
It only has to allow global market forces, unleased in large part by Trump
policies, to naturally devalue the Yuan.
Then there’s China’s $1.3 trillion of US
assets, mostly US Treasuries. It could slow its purchase of new US government
debt, which it appears it may now be doing. Should the tariff-currency
war intensify, if necessary it could stop or even sell off its dollar hoard of
US Treasuries. It’s been moving toward that since September 2018, as its
purchases of US securities first slowed and then declined in March 2019. That
reduction of purchases, if not offset by other economies buying more, would
drive up long term interest rates in the US and in turn the value of the US
dollar still more—all of which further slows global growth.
Rising US rates and the dollar will likely
precipitate another US stock and junk bond sell-off, similar to that
which occurred late 2018. And we know Trump doesn’t like stock market declines.
There are numerous other ‘actions’ the
Chinese could take in response to US neocons intensifying or prolonging the US-China
tariff-trade war, further driving the differences into a broader economic war.
Various bureaucratic obstacles to US corporations’ majority ownership of
operations in China, ‘buy China’ not America in China movements, restrictions
on the sale of what’s called ‘rare earths’ minerals key to technology and
military production would likely be imposed. Even if US neocons don’t
understand this, or don’t care, widespread business and banking interests do
and could intervene more forcefully should Trump’s drift toward economic war
continue.
Economic Slowdown & Recession ‘Wild Card’
And there’s a wild card in the trade war
deck that may check the neocons influence perhaps. That’s the current softening
of the US and China economies. That could force both sides to an
agreement. Trump may grab the major concessions on China purchases and US
majority ownership rights in China and announce a big victory—just before the
2020 US elections.
China’s economy is clearly slowing,
growing likely no more than 4%-5%, not the official 6.5%. But so too is
the US economy as well, which will start to become more obvious once the data
for the 2nd quarter US GDP start to come in by late July.
The US 1st Quarter GDP numbers were
propped up by temporary factors associated with inventory over-investment and
net exports, both of which are fading rapidly this quarter. Moreover, US
household consumer spending is barely growing, most recently at less than 1%.
The housing sector has slowed for the past 17 months. Manufacturing orders and production
is now stagnant and business investment has turned negative. Lagging
indicators, like jobs, are now beginning to turn down as well. The US
Central bank’s lowering of interest rates in the second half of 2019, which is
helping to drive the massive $1.5 trillion in stock buybacks and dividend
payouts scheduled for this year, may succeed in putting a temporary floor under
stock markets. But the real side of the US economy is being driven to slowdown,
or even worse by year end. More bank research departments, big finance
capitalists, and even some economists, a notorious conservative and timid
forecasting lot, have begun to predict recession by year end 2019.
A more rapidly slowing US economy, now
clearly beginning, may thus change the trade negotiations dynamic, forcing both
sides to some kind of a deal. And if the US slips into recession by
winter 2019-20, which this writer has also been predicting the past year, the
pressure to cut a deal will grow.
Trump may yet be convinced to take the
China concessions already on the table—and temporarily suspend the US demand
for China’s capitulation on the technology issue. Trump could yet take
what’s been offered by China—i.e. to buy $1 trillion more US farm goods and
allow US corporations majority ownership of operations in China—and declare a
major victory in the trade negotiations in 2020 just before the
elections. The nextgen tech-military confrontation—the real core of the
US-China dispute—could be re-raised and revisited thereafter later. That’s
one possible scenario. Because for Trump a ‘deal is never a deal’, it’s
never concluded, but subject to reopening whenever he so chooses.
Breaking an agreement is standard practice
for Trump. Just ask the Mexicans, where Trump recently threatened to levy
25% more tariffs even after US concluding a new NAFTA 2.0 deal last year. Or
ask the Iranians, who thought they had an agreement with the US. Or the
Europeans who thought they had a Climate deal. For Trump, negotiations are a
continuing process, punctuated by happy talk events stroking foreign leaders,
followed by more threats of sanctions, and personal insults and intimidations,
to force a reopening of deals once thought concluded by trading partners—allied
and challengers alike.
In other words, even if a China-US trade
deal is done, perhaps next year, the trade war with China will not be over. It
will have just begun, as it evolves toward a broader ‘economic’ war after the
2020 elections, perhaps even before.
The key to a China trade deal occurring
sooner. rather than later, is whether Trump and US big bankers and
multinational capitalists can convince the neocons and the military industrial
complex to agree to a short term deal with China now that provides only token
nextgen technology concessions—backed by the Trump-Neocon assurance that the US
will reopen and resume the technology offensive after the 2020 elections once
again.
For the US economic and political elites
are in basic agreement with the neocons behind the Trump daily circus on the
nextgen technology issue. Neither will allow China to challenge US global
hegemony next decade by leveraging nextgen technologies that are the key to
both economic and military hegemony. It’s just a question of timing by
the US—elites, Trump, neocons. Take two bites of the bargaining apple
from the Chinese, and come back later for the big bite: i.e. the fight over
nextgen technology. Either that or Trump and the Neocons will continue to
insist on three bites all at once.
This writer’s guess and prediction is that
the now slowing US and global economy will result in the former, and the US
will reopen any deal reached and renew its technology demands after the 2020
elections. For the current tariff-trade war is just the opening salvo in
an epic struggle between the US and China. The technology war has already
begun, albeit in early stages. The Trump trade war today is just the opening
move today to a more fundamental technology war tomorrow.
Historical Precedents
Just as European and American imperialists
jockeyed and maneuvered in the years leading up to 1914 and the first world
war, with their focus on disputes over markets and global natural resource
control, in the 21st century the jockeying and maneuvering has similarly
begun—albeit this time with a different focus on nextgen technologies, over who
controls global money flows, whose currency will continue to dominant, over who
calls the shots in global institutions like the IMF, World Bank, WTO, and so
on.
The 2020s decade ahead will prove a highly
dangerous period. The global capitalist economy is slowing, as has always done
periodically. A new restructuring of global capitalism is on the agenda,
as it was in the late 1970s, in the mid-1940s, and during the years immediately
leading up to 1914.
Trump’s trade wars and other policies
should be understood as part of a broad reordering of US economic and political
policies, and relations with other nation States allied and adversary alike, to
ensure the continuation of US global economic and military hegemony for the
coming decade.
Nextgen technology development is at the core of that restructuring and
restoration of US hegemony. Trump is just the appearance, the historic vehicle,
behind the deeper global capitalist transformation in progress.
Abrazos,
PD1: Ayer fue Santo Tomás, el
que pasó a la historia por la duda de fe, por dudar de la resurrección… Y sin
embargo, como sabes, al verlo creyó, e hizo la mejor forma de decirle al Señor
que creía en Él: “Señor mío y Dios mío…”, que tantas veces repetimos todos.
Pasó a la historia por algo que nos habría pasado a cualquiera y no por ese
maravilloso acto de fe…
