Hmm, maybe China will focus more on improving its internal economy, since exports to the US are dropping.
One thing I do not quite get is, what is the benefit to China of simply having more cash? Unless cash is a proxy for goods and services, it is worthless. And all China is doing is importing cash (the trade surplus), which they have decoupled from any tangible value. Having warehouses of money cant do them much good. Unless they are planning to dump it all on the world economy and cause major recession? Will China eventually realize that maintaining a trade surplus means they are giving away real products of their citizens labor for very little value?
On the US side, of course, the imbalanced trade means that we are locking people out of the job market in return for cheap goods that they cannot afford since they dont work.
If there is a China Profit and Loss report, you are focusing on the bottom line and the balance sheet cash
You overlook the expense account of wages and salaries. If sales slow then the need for workers to make the products not sold diminishes. At sme point employee rolls must be cut....... layoffs.
In an economy drunk on growth, a reversal will hit workers hard. Large numbers of the layoffs can occur in the Pearl River Delta region adjacent to Hong Kong
People are out in the streets of Hong Kong in the hundreds of thousands
If that disease jumps the border to those layed off......... big problem
Very similar to what I often say. Amazing how China got suckered into providing us an incredible amount of tangible goods, in exchange for paper, the value of which could be wiped away at any moment.
China has few natural resources. Especially when considering their need. They have a huge population. And they export vast amounts of goods. So, they need to import. Imports require dollars. Oil alone is a big reason for dollars. They buy oil with dollars. Remember China is the largest new car market. Most people in China did not own a car ten years ago. Now they drive and consume gas. Besides oil, most commodities China needs are traded in dollars.
So dollars come in and go out. Right now they are supposed to have $2 trillion dollars. But they have money flowing out in personal bank accounts. They buy resources and energy from other countries. So the $2 trillion is getting smaller. Its not growing. Japan is now the largest holder of US debt. Thats because China has been selling our bonds for dollars.
China’s money is going into a hugely accelerated military build out and into R&D for the nest super-weapon.
Last year China had one converted Ukraine-built carrier; this year the next ski-jump home-built one launches; in the following years: a steam launched carrier; and the one after that, a nuclear EMALS one launches. They will quickly achieve a blue water fleet and unless the US begins building, quickly surpass the US Navy in ships.
China is also building out its heavy ice-breaker fleet to include nuclear powered ones (the US has only 1 semi-working conventionally powered heavy).
The J-20 PLAF (anti-access gen-5) fighter has come on line.
Cities are being built all over - even if no one lives there.
That’s where a very large part of the money goes.
...Unless cash is a proxy for goods and services, it is worthless.
BUT cash IS a proxy for goods and services, and definitely not worthless.
That last line was great.