Posted on 08/31/2021 4:28:32 AM PDT by cba123
BEIJING, Aug 26 (Reuters) - China is maintaining "normal communication" with the United States on trade, the Chinese government said on Thursday, one of the few areas the world's two largest economies have refrained from confronting each other over this year.
Washington and Beijing signed a so-called Phase 1 trade deal in January 2020, before the widespread outbreak of COVID-19. The pact calls for China to increase its purchases of U.S. exports by $200 billion over two years.
(Excerpt) Read more at reuters.com ...
China is maintaining its huge trade surplus against America.
Heck no. Bring it back to America. Thank you. :)
China has reversed the effect of financial “gravity” by manipulating their currency. This manipulation makes it hugely advantageous for American companies to manufacture their goods in China over the United States. If the companies don’t take advantage of the manipulated currency, then their competitors will and their products will be higher priced. Over time they will lose their customer base as probably 80% of sales are determined on price alone. Until this manipulation is addressed products will continue to be manufactured in the low-cost center as opposed to locally. There is little that can be done in the US to address the problem. There are high tariffs, but that’s like a Band-Aid on a finger when the problem is in the liver.
Collapse of the Chinese system:
There may be a solution on the horizon to currency manipulation. Decades of this policy are building up systemic problems in China and those problems may lead to the collapse of their entire economy. Unfortunately, that’s not a good solution as it shifts the problems to different and possibly more war-related issues. For example, it’s possible that China will break into two or more nuclear armed North Korean style dictatorships. Also, the world’s central banks are interrelated and one country going under may drag others with it. (Anyone who was foolish enough to tie their economic well being to China. And, that’s a lot more than you’d suspect.)
Near shoring:
In the meantime, as the systemic problems in the Chinese economy build up, it is losing its low cost advantage to growing and healthier economies like India, Vietnam and Mexico, to name a few. Many US companies are already near-shoring closer to home as the financial disconnect is no longer as bad as it was before.
The ever-larger push for lowering the “wealth gap” in the US by raising wages at the bottom means there is no way the US companies can bring the jobs back and compete with imports. The more that government “gives” workers benefits the fewer jobs can return. It’s like a physical law. A company can only roll the financial boulder up the hill for so long before it goes bankrupt. So, just saying “bring the jobs back” can’t be done. It’s like saying, “douse the sun with water.”
On the other hand, many jobs are returning, but they’ll look totally different because of technology. Once you make the capital investment in, say, sock producing machinery, it takes only two tech workers and a handful of floor help to keep a hundred thousand square foot factory humming and producing more than a thousand workers with the older tech machines in, say India.
Government policies or “giveaways” in maternity leave, dental care and others are leading to more and more jobs being replaced by robots. From weavers to burger flippers, the entry level or low IQ jobs are going to be forever fewer, no matter what happens to China.
Trump was going to. Had he won re-election maybe he would have. Never know. Infrastructure was another on his list. Now we’re getting it at a much higher cost.
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