For years, we’ve been hearing about and reading stories on the coming dominance of the Chinese economy. The storyline is that China is growing faster than the U.S., has a much larger population and a growing military capability and that it is just a matter of time before China surpasses the U.S. as the hegemonic power in East Asia and the Western Pacific.
In its most extreme form, this storyline said the 1800s were the “British Century,” the 1900s were the “American Century and the 2000s would turn out to be the “Chinese Century.” This narrative was proposed by the same globalist elites from the universities and think tanks (many of whom are Americans) that proposed open borders, zero tariffs, global supply chains and outsourcing of U.S. jobs. As usual, the elites are wrong on all counts. Open borders put downward pressure on U.S. wages.
Zero tariffs meant goods could be made in cheap-labor countries like China and shipped to the U.S. duty-free. Outsourcing destroyed perfectly viable U.S. operations in steel, autos and electronics and moved those jobs to sweatshops and prison-labor camps in China. The result was a declining U.S. economy and greater income inequality.
Finally, the U.S. is fighting back as described in this article. Trump’s tariffs have slowed export-led growth in China and expanded U.S. manufacturing. More importantly, China’s growth is slowing for internal reasons that are not entirely related to the trade wars. China has grown with investment, but most of that investment has been wasted on empty “ghost cities” and other white-elephant infrastructure that cannot pay its way.
China is weighed down with trillions of dollars in dollar debt that it cannot easily repay without depleting its dollar reserves. China’s banking system is insolvent and much of its real estate investment has been financed with “wealth management products” that cannot be paid back because the financing is little more than a gigantic Ponzi scheme. With slower growth, declining reserves and massive debt, the stresses in China’s economy are now apparent to all, despite upbeat talk from Beijing.
The collapse in China will accelerate and result in capital controls, asset freezes and political repression of social disorder. This collapse is just getting started and has far to run.
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