by Pepe Escobar (cross-posted with the Asia Times by special agreement with the author)
Trade tensions between the US and China could drag on for decades but China’s focus on its Belt and Road Initiative could provide relief
Alibaba’s Jack Ma has warned that the ongoing US-China trade war could last at least 20 years. As we’ll see, it’s actually more like 30 – up to 2049, the 100th anniversary of the foundation of the People’s Republic of China (PRC).
Steve Bannon always boasted that President Trump was bound to conduct a “sophisticated form of economic warfare” to confront China.
The logic underpinning the warfare is that if you squeeze the Chinese economy hard enough Beijing will submit and “play by the rules.”
The Trump administration plan – which is, in fact, trade deficit hawk Peter Navarro’s plan – has three basic targets:
- Displace China from the heart of global supply chains.
- Force companies to source elsewhere in the Global South all the components necessary for manufacturing their products.
- Force multinational corporations to stop doing business in China.
The overarching concept is that unending confrontation with China is bound to scare companies/investors away.
There’s no evidence South Korean or German conglomerates, for instance, would withdraw from the vast Chinese market and/or production facilities.
And even if the Flight Away from China actually happened, arguably the American economy would suffer as much, if not more, than China’s.
The latest US tariff volley may lower China’s GDP by only 0.9 percentage points, according to Bloomberg Economics. But China may still grow a healthy 6.3% in 2019.
This is a decent overview, with numbers, of what the trade war might cost China.
What’s certain is that Beijing, as confirmed by a rash of editorials in Chinese state media, will not just play defense.
Beijing sees the trade war as “protracted.” A Commercial Cold War 2.0 atmosphere is now in effect but China is fighting the ideological war on two fronts. At home, Beijing is using strong language to define its position against the US but taking a significantly softer approach in the international arena.
It’s extremely helpful to understand how the current situation has arisen by examining the work of Wang Hui, a professor of Chinese language and literature at Tsinghua University, top essayist and the star player of China’s New Left.
Hui is the author of the significant The Rise of Modern Chinese Thought, published in 2005 and still without an English translation.
Some of Hui’s key conclusions still apply 13 years later, as he explains how Chinese society has not yet adapted to its newfound status in international relations; how it has not solved the “accumulated contradictions” during the breathtakingly fast process of marketization; and how it still has not mastered the inherent risks in the globalization drive.
Hui’s analysis is echoed in many a Chinese editorial including delicious throwback lines such as the “sharpening of internal contradictions” in international relations. After all “socialism with Chinese characteristics,” as codified by Deng Xiaoping and renewed by Xi Jinping, excels in exploiting and bypassing “internal contradictions.”
It’s all about BRI
Jack Ma, also hinted at a bigger picture, when he said that to counter the trade war, China should focus exports across the New Silk Roads/Belt and Road Initiative (BRI), specifically mentioning Africa, Southeast Asia and Eastern Europe.
Five years after President Xi launched BRI – then named One Belt One Road (OBOR) – in Astana and then Jakarta, it’s only natural that Ma concentrates on what I have emphasized to be the primary Chinese foreign policy strategy for the next three decades.
It’s never enough to stress that BRI’s six main connectivity corridors, spanning up to 65 nations, according to the original timetable, are still in the planning stage up to 2021. That’s when actual implementation starts, all the way to 2049.
Ma alluded to BRI expansion across strategically positioned nations of the Global South, including Central, South and Southeast Asia as well as Africa and Eastern Europe.
Quite a few of these nations have been extremely receptive to BRI, including 11 that the UN describes as Least Developed Countries (LDCs), such as Laos, Djibouti and Tanzania. BRI projects – and not World Bank projects with strings attached – represent the solution to their infrastructure woes.
Thus we see Beijing signing memorandums of understanding (MOUs) for BRI projects with no less than 37 African nations and the African Union (AU).
As BRI is closely interlinked with the Asian Infrastructure Investment Bank (AIIB), the bank will handle financing for BRI projects in Indonesia.
And the US-China trade war extrapolates to third countries such as Brazil profiting in terms of its commodities exports.
China is slowly but surely attempting to master the fine-tuning of financing complexities for projects in multiple connectivity corridors – including those in Bangladesh, Pakistan, Myanmar and Kazakhstan. At the same time, Chinese companies keep an eye on a political deal that will have to be brokered by the Shanghai Cooperation Organization (SCO) to unlock the BRI integration of Afghanistan.
In cases of nations excessively exposed to Chinese investment – such as Laos, Djibouti, Tajikistan and Kyrgyzstan – China is deploying a range of financing options from debt relief to clinching long-term contracts to buy natural resources. Whether China will leverage financing of strategic deep-water ports in Myanmar and Djibouti to build a “string of pearls” dotting the Indian Ocean supply chains is pure speculation.
A key vector to watch is how Germany and France approach BRI’s inroads in Central and Eastern Europe, for instance, via the Budapest-Belgrade high-speed rail linked, BRI-style, to Piraeus port in the Mediterranean. Italy is in – the Adriatic is connected to BRI. Germany is in with arguably BRI’s key European terminal in the Ruhr valley. France, however, dithers.
Russia is also in. Nearly 70 projects are being co-financed by BRI and the Eurasia Economic Union (EAEU). The Vladivostok forum once again proved the Russia-China strategic partnership, and its BRI/EAEU extension is in full effect.
A flimsy developed strategy by the Quad (US, India, Japan, Australia) has no potential to derail BRI’s reach, complexity, wealth of capital and human resources.
For all the financial/soft power challenges, BRI participant nations, especially across the Global South, are locked on their side of the Chinese infrastructure investment “win-win” bargain. The current, relentless BRI-bashing is not only myopic but irrelevant, as BRI, constantly fine-tuned, will keep expanding all the way to 2049. What it will certainly face is a 30-year trade war
Does ‘Merica empire still have another 30yrs ?
Even 3yrs is a miracle going by the debt they owed and the interest on the rise
A lot is going to happen to our planet on a grand ecological scale in the next 30 years. All the expansionist plans are going down in flames as the real planetary karma we are facing releases it’s full fury. 30 year plans are simply opium pipe dreams that will never b realized.
Exactly what I was going to point out, mike. The dire forward projections by the Meadows team/Club of Rome prognosticators, of ‘The Limits To Growth’, are so far dead on track, and on schedule. They don’t offer any prospect of ANY combination of states being able to continue with business-as-usual growth forever, neither of GDP nor of population. It just isn’t going to happen.
Much as I like the way the Russia/China alliance is hastening the end of the vile, criminal Anglozionist empire, I don’t see the inheritor empires being able to do anything to negate The Limits. All three empires, and all the smaller states wondering which one would make their best ally, are going to come up against the mid-century global ultimate crisis, which TLTG – both the 1972 original and the ‘Thirty Year Update’ – have prognosticated, with such chilling accuracy so far. I see no combination of states, no political or economic policy which is going to be able to escape the worldwide crisis.
Geez, Louise, guys!
Can’t we learn the ABCs ……..of this Stop The Empire thing!
Mike and Rhisiart seem unaware the Forester and Meadows are Empire Academics (quacks) and the Club of Rome was spawned by NATO…..officially.
A quick internet search will show you the connections. Here is just one of many that turned up in less than a minute of searching:
https://lazarus5712.wordpress.com/2012/03/30/the-club-of-rome-depopulation/
“This group of Anglo-American financiers and industrialists from ten different countries,met in April, 1968 at Rockefeller’s private estate in Bellagio, Italy, at the request of Aurelio Peccei, the Italian industrialist who had close ties to Fiat and the Olivetti Corporation. He claimed to have solutions for world peace and prosperity, which could be accomplished through world government. The Club of Rome was established with a
membership of 75 prominent scientists, industrialists, and economists from 25 countries, which along with the Bilderbergers, have become one of the most important foreign policy arms of the Roundtable group.”
Need I spell it out for y’all? Roundtable Group = B-R-I-T-I-S-H E-M-P-I-R-E
“Many of the Club of Rome executives were drawn from NATO, and they have been able to formulate a lot of what NATO claims are its policies. Through Lord Carrington, they were able to split NATO into two factions, a left-wing political group, and its former military alliance.”
My guess is that you’d find yourselves in “the left-wing” (anti-progress) “political group” unawares of the top down planning…..by the Roundtable, the CFR……and NATO…..
There is NO limit to increasing comprehension of the lawful ordering of the Universe and the application of that comprehension to the providing of greater material benefits to more people, with less adverse effect on the biosphere than cruder technologies used by less people.
If the Chinese leadership had not ignored the Chicken Little Screechings of Meadows Forrester and the EVIL Club of Rome..that you have swallowed whole..DO YOU NOT understand.there would be NO modernizing China and no aggregate capacity (without China!!!!) for any combination of nations in the world to resist the Empire’s determination to cut the world’s present population by SEVERAL billions of persons……for the exclusive benefit of the psychopathic world oligarchy….centered in those Empire Institutions cited above that employed Forrester and Meadows and founded the Club of Rome…..to the end that they might squat on an enslaved globe…..in as close to perpetuity as they could manage?????
I don’t think that’s going to happen, despite many millions of westerners that have been duped by their propaganda.
The Messenger = Message fallacy yet again. Will it ever die? (Sigh!) So this gobbledegook about who backed TLTG is supposed to negate its terrifying, spot-on accuracy of forward projections so far, is it? And none of the Synergising Global Crises (the SGCs) which it foreshadowed – all now unfolding precisely on the projected schedule – are real; because the idiot denialists don’t want them to be? Joke!
Whoever you really are, Bro 93, try getting some basic ecological awareness of the *current* situation, before posting such tosh. Note that that’s *current*; not something expected – or maybe not – some time in the sweet bye-and-bye; current: actually happening right now. Reality has a way of ignoring our human delusions completely, and just rolling over us when we try to deny it. Sweet dreams with your ‘no limits progess’n’growthforever’ delusion – whilst you still have time left to nurture it. The geophysical steamroller is already on the move, ushering in The Long Descent (qv*) into a new dark age. But still, for blind denialists, “everything is for the best in this best of all possible – aaaargh!” LOL!
Do troll on here with your denialist silliness, Bro. Affords us realworld-dwellers a certain amount of grim laughter. This is all I really need to say on this matter, so – byeeee! :O)
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* See here for example: https://www.resilience.org/stories/2008-08-31/review-long-descent-john-michael-greer/ And please, ffs, don’t try the ‘peakoilhasbeendisproved’ delusion-mantra. The global energy predicament, with our fatal dependence on fossil hydrocarbon energy to keep everything going, is still precisely on track. Before blabbering about ‘renewable’ energy systems, please grasp how *every one of them depends crucially* on fossil-hydrocarbon energy subsidies, to build and to maintain them; and none of them delivers more than a small percentage of the current non-sustainable energy splurge; to say nothing of the even greater splurge envisioned by the progress’n’growthforever delusionals. EROEI (qv) rules, OK!
@Bro 93
Ecological crisis is happening, the only question remaining is who will prevail. “Industrialists” et al making their research since decades, while you focus on secondary connections. Please consider Bacons “scientia potentia est – knowledge is power” which actually is “esoteric knowledge is power” (esoteric in the sense of “belonging to an inner circle” or exclusive knowledge). Knowledge about the future is key to power since Stonehenge era.
“There is NO limit to increasing comprehension of the lawful ordering of the Universe and the application of that comprehension to the providing of greater material benefits to more people, with less adverse effect on -the biosphere than cruder technologies used by less people.”
Yes there is a limit called thermodynamics. The crude use of technology is running on mortgage, which will be paid by all those humans who dont have the privilege to be born in our time and will have less time, less resources etc to cope with ecological crises. Your belief in “non-crude” technology used by billions of humans to provide benefit with less adverse effects is essentially a messianic claim to technology. You have simply shifted from Jesus Christ as messiah to technology as messiah, which/who will come sometime in the future and redeem our “sins”. This technological salvation will not happen in my opinion.
If the Chinese leadership had not ignored the Chicken Little Screechings of Meadows Forrester and the EVIL Club of Rome..that you have swallowed whole..DO YOU NOT understand.there would be NO modernizing China and no aggregate capacity (without China!!!!)…
The modernization of china has its price tag, which has not been paid for yet. Depleted soils, lack of fresh water, persistent organic pollutants etc etc ….to sum up: a long list of problems, without any reasonable technical approach to solve. Oh wait – there is one remarkable solution: chinese people are pollinating their agricultural crops by brush, since insect pollinators are vastly absent, due to pesticide overuse and shortsighted agricultural practice.
PS: Meadows/Forrester study was conducted in the 70ies and has not been disproved, although numerous attempts. In contrary the study is supported by each passing year by what is happening in the ecosphere.
Dont kill the messenger.
The Chinese know that there are really existing limits to growth. That is why they have worked, for decades, and with experts from around the world, on creating an ‘ecological civilization’ that can sustain Life on Earth for an indefinite future. That is why they are driving global renewable energy research, production and installation, why they are building networks of high-speed trains, the development of electric vehicles, and practising large scale reforestation etc. On the other hand, the enemies of Life on Earth, the ruling psychopaths of the glorious West, practise neo-liberal capitalism that values profit, ‘wealth’ and insatiable greed ONLY, and that has its own plan to solve the ecological Holocaust. You can see it in action when you consider the Pentagon’s global network of bio-warfare research installations, and their work to collect specimens of DNA, blood and tissue including neoplasms, from all the world’s identifiable population groups, and in the research they do with genetic recombinant technologies like CRISPR. All for ‘defence’, at a cost of tens of billions, per year, of course.
Agreed that the end of cheap transportation will change the nature of trade. But it won’t cease. Simply migrate to higher value items. Think silk, rugs, high tech bronze items, spices. Add high value technology products for today’s world. Been there before. By design in the 7th century China exported high tech bronze and utinsils, and china-ware westward to incorporate what is now Western China. Well documented-see John Keah “A History of China”. All under Cyclic AMP Power.
Well, its the Anglos only abilities.
1/3 of America are employed in the Military Industrial Complex, 1/3 in US/Afghanistan are employed in heroine business.
Then we have the Anglos MSM hegemoni, Hollywood and Facebook soft power.
What could possibly go wrong?
USD will be toasted in 2 years. The next financial crash will wipe out the USA.
This trade war won’t last 30 years.
The climate, as others point out, remains over-arching… .
https://www.youtube.com/watch?v=XVpkTKZoq48
https://guymcpherson.com/climate-chaos/climate-change-summary-and-update/
http://arctic-news.blogspot.com/p/extinction.html
And perhaps also over-arching is that Empire is on thin ice…as Chris Hedges predicts…and quotes no more than 10 year left for Empire…https://www.youtube.com/watch?v=1vkYCUu44ck and etc.
The key is the interest rates.
Interest rates are set by demand for the bonds. Ie, if lots of people want 10-yr US treasury bonds, they can offer a lower rate and still get rid of them. If they want to sell more bonds than the world wants to buy, then they raise the interest rate to bring in more buyers.
Trump and Congress agreed on two bills late last year. One was Trump’s big tax-cut for Billionaires. Seems like someon like the GAO estimated the cost of that as raising the yearly deficit by a Trillion to a Trillion and half dollars. The other bill was a bill to fund the government and avoid a shutdown. Congress and Trump agreed to make a deal where everyone got what they wanted. Price tag on that was another half a Trillion dollars a year or so.
Thus, the massive Obama/Bush deficit of a Trillion dollars a year is soaring to 1.5 to 2 Trillion a year.
That’s a lot of money that the US Treasury now has to sell bonds to cover. Meanwhile, the Fed got sick of all of the distortions that risk free zero interest rate money was causing. Just one example is corporations also going massively in debt for short term profits for the CEOs and stockholders. They’d borrow a lot of money, use it to buy back the company stock, which raises the stock value for stockholders, which usually gives performance bonus payouts to the CEO. So, the Fed is raising interest rates at a steady 0.25 a quarter, with a plan to keep doing so all through next year.
Take a look at the interest rate on UST 10-yr bonds. It passed 3% recently, projected to head to at least 4 and possibly higher.
Meanwhile, China and Japan have both stopped increasing the amount of UST-bills they hold. Their overall total is staying constant or just dropping slowly, so they are still replacing the ones that pay off on the due date. But they aren’t buying more.
What happens to the interest rate that the US Treasury has to use to sell lots and lots and lots of T-bills? Lots and lots and lots means at least 2 Trillion dollars a year, and possibly 2.5 Trillion. And that’s if Trump and Congress stop spending even more. Wonder what Trump is going to give the military in next year’s budget?
And this is in economic good times. Its mostly spending on debt, which always makes an economy look good. Reagan showed us that when he did his huge expansion of debt to create his ‘economic miracle’. A family that is spending lots on the credit cards always looks like they are doing well and has a high standard of living. But, what happens when the economy turns down? What happens when that decreases the tax revenues coming in? What happens when that economic down turn means more people needing help not to starve, or when the mental depression from the downturn turns into an opiod addiction and the hospital bills and social costs?
The government budget deficit always shoots up when the economy heads south into a depression.
Meanwhile, all the problems with the banking system last time it crashed are still there. Nothing was fixed. They made some weak, loophole ridden reforms for the PR. They were so weak that Wall St. cheered on the floor of the stock exchange when they were passed. Now Trump and the Republicans say that those minimal reforms were too much and have to go. The last time the Fed Reserve propped up the banks with about 4 Trillion dollars? They are just starting to try to ease that off their books. How high can they go if the economy turns down and the banks start failing?
This looks like the peak of the economic cycle, which means nowhere to go but down. It looks like a fake peak based on massive borrowing. When it starts going down, yell Timber! The sad part is the damn thing will crash right on top of me.
Pepe’s articles are always entertaining, but this one is outright funny.
As in – Seeing how US is behaving like a wounded beast, lashing out at friends and adversaries alike, I don’t think US will last 20 years, much less 30.
Look for the U.S., Israel, India, Britain and Australia (but mostly international Jews who run todays global monetary scheme, albeit unjust, unfair, cruel and anti human progress), to try their hardest to try and derail the BRI Sink Road.
Many world leaders especially in the Global South, are afraid of coups, color revolutions, subversion and outright degrading of their Central Banks. Worse yet, military action.
The nefarious cartel of schemers and plotters will do all they can.
The U.S. economy is living on borrowed time, with monetization and other shell games, one of which is forcing GCC Gulf Arab monarchies and lackeys to buy and prop lots of U.S. debt. But socially, the U.S. is showing serious signs of cracking and enormous pressure is building as their middle class continues to slide downwards.
Same with Britain, which in all actuality is no more than a U.S. state. A lackey. with a circus royal family and racial and other tensions. It too has GCC Arabs financing a lot of its debt.
Israel is totally dependent on the U.S., both financially and militarily. Also by the British and French. It is facing a fearsome foe in Hezbollah, whom are now battle hardened by 7 years experience fighting in Syria in desert, rural and urban environs. Iran has every square foot/meter of Israel mapped out for ballistic missile bombardment in redundancy, should it be attacked. Literally Israel’s annihilation should it suicidal attack Iran unconventionally.
Israel is heavily relying on the U.S., Britain and France et al to come to its rescue, when the coming, and you bet it is, regional war between the ‘Axis of Resistance’ and Israel and co. It will involve the Syrain Arab Army, and auxiliaries, the Iraqi Hasd-Al Shabi(Popular Mobilization Forces, who indecently answer to IRGC Lt. Gen Solemenei, who answers directly to Mr. Khamenei), Iraqi Hezbollah and a multitude of militias, Arab tribes of Iraq and Syria, and we may even see Assyrians getting involved, as their land is being taken by the SDF/Kurds(U.S. stooges). The Iranians will play a heavy role with the IRGC and also there are thousands, as much as 30,000 Afghan volunteers,
The problem for Israel is that the ones they are relying on to come into the fight full throttle, no longer have the stomach, the will power, the popular support, domestic support(except for the Christian Zionists and Zionist lobbies in the west, especially the U.S.) the west simply cant fight and win , hold territory, or combat the very people in their own countries. We saw how the Iraqi insurgency bogged down and ground into the sand the U.S. war machine in a ferocious war of attrition, using IED’s , snipers and all in all, 14 of the U.S.’s 16 total Army Battalions were chasing one firefight from one end of the country to another. Then a ‘ surge ‘ was announced, by the U.S., well dear friends, that surge was billions of dollars flown into Iraq to pay off the Arab tribes to stop fighting them so they could leave with some kind of face.
The U.S., Brits et al are still, after 17.5 years not able to subdue the Taliban, whom are dressed in bedsheets and beach sandals, armed only with AK-47’s, IED’s, RPG-7’s getting around on little motorcycles and such.
Israel, for it the writing is on the wall. There will be no rescue, even if the U.S. were to instill a draft. Foreign armies would be enveloped, swallowed by the countries of the region and mass casualties will occur. Sure, they may have air superiority, but wars are not won from the air. The ‘ axis of Resistance ‘ are the ones with boots on the ground. And potentially millions of them. Arrogant Zionists must come to their senses or face catastrophe. Time to scrap that idea.
India. Well, cash strapped India has sold herself to the West, as their upper class is infatuated with all things Western. They have a ‘brain-drain’ as their educated class have migrated to the U.S., Canada and Britain. Left behind are about 900 million + living in entrenched poverty, all the while China , since 1980, has lifted about the same amount out of poverty, into a vast, enormous middle-class. India has been reduced to a 4th world country, with horrible infrastructure in tatters. It has nothing to offer anybody. Instead of making peace with her neighbors, like China and Pakistan(both have just about completed the CPEC-China, Pakistan Economic Corridor, costing 50billion +, and will interconnect the two in many ways), it accumulates weapons with money needed elsewhere. Hindu nationalism and Zionism are similar in many ways. Both are racist, bot countries have military occupations of Muslim lands, Palestine and Kashmir. But unfortunately Bollywood is in love with Hollywood, and things like being a ‘ light skinned’ Indian’ actually gets you privilege. India, is a country of call canters, and call center scammers who bombard the phone lines of people all over the world scamming them out of money. I myself have had many, many such calls. India is full of slums, on top of slums, meanwhile, China is building, and has built mega Metropolises that are unrivaled. Infrastructure project, the Three Gorge Dam etc. It just two months ago inaugurated its first hi-speed, train traveling to Tehran, Iran. Superhighways all over China now. Even up to the Indian border, should things get militarily hostile between the two, China could move Main Battle Tanks MBT’s and heavy artillery up to the battle and into India itself in short order, on the Indian side, the roads are in shambles.
The GCC Arabs can easily be put out of the oil and gas business should Iran desire, is pushed into doing so, or hostilities break out.
The 19th century belonged to Britain, the 20th to the U.S., by the middle of the 21st century and beyond, will belong to China, and for the betterment of mankind. A new paradigm is happening before our eyes.
Everyone loves a ‘ win-win ‘ philosophy.
I wonder what the total sales for Apple is in China?
Compared to Apple’s total sales in USA?
I wonder what Apple’s projections look like for the future of these two numbers? Related of course to projections for expanion of China’s middle class and to projections for the income of that class.
Its quite possible that if forced to choose between them, if the USA makes it one or the other, how many companies will choose China?
The sanction/tariff approach by Trump (and possibly by other capitalists) could abruptly turn on a dime if Trump is ousted in 2020 or sooner.
(Interested American citizens don’t really know to what extent US/Other capitalists back Trump’s directions against China.)
There is the possibility that if Trump is ousted in 2020, or sooner, his current approach could end swiftly; replaced by the usual US military aggression that would do everything possible in using their usual huge military aggression against China, Russia, etc.
The European Central Bank (ECB) has conducted a huge study to check the outcome of a potential escalation of the US’ economic warfare.
Their results: The US will be the largest loser of the tradewar they themselves have inflicted on others and will only achieve that their own economy will shrink considerabley in the long run.
Negative effects have various reasons:
Firstly, the US is very unlikely to be able to compensate for losses in exports to Asia and Europe on their domestic market. As additionally raising tariffs does not change the fact that the US relies on a considerable number of imported goods from China, US consumers will be burdened most strongly by tariffs and the decrease of their consumer spending will further affect the domestic market in the US.
Secondly, tariffs in combination with the overboarding sanction system will deter foreigners from investing in the US market. Chinese investors have already held back massive investment plans. European corporations prefer producing products meant for the Asian markets in Asia directly. So investments may shrink.
Thirdly, as US economic warfare aims at all corporations dealing in dollars, there will be slow, but steady withdrawal from the use of dollar and an increasing reliance on other currencies.
However, worst is the US’ loss of reputation and attractivity. The times when the US could base their prosperity in attracting the world’s most gifted young people, will be over soon. In the long run, this decrease of attraction will lead to inevitable decay.