Monday, December 12, 2016
Is Trump Preparing to Stiff China?
President-Elect Donald J. Trump (DJT) has promised to "rebuild our depleted military" and spend a lot of money building new infrastructure. Where will he get the money?
Trump's recent phone call with Taiwan's President has angered the People's Republic of China (PRC) leaders who've made it clear that a "two-China" policy would be unacceptable. U.S. relations with China are already deteriorating before DJT takes office. What are we to make of this?
Trump has a history of using bankruptcy and stiffing contractors as part of his business practice.
How much does the U.S. owe China? Over $1 trillion.
Suppose China-U.S. relations continue to the point DJT calls for sanctions and puts a stop to payments on our Chinese debt. Suppose such a move doesn't scare the hell out of the rest of America's debt holders and throw the international financial markets into a fit. What are the other risks?
Remember when the U.S. pulled out of Iraq and left a lot of weapons in the hands of the Iraqi military? Those weapons ended up in enemy hands. A similar situation has been created by U.S. corporations setting up industrial facilities in China, which now has an excess of industrial capacity.
If DJT forces a "showdown" how much can U.S. policies actually hurt China? The fact is, if the U.S. wanted to beat down the Chinese economy, it's probably 20 years too late. China leads the U.S. economy in manufacturing and agriculture.
Everybody the U.S. can sell to, China can probably sell to at a cheaper price.
If it loses market share, how will the U.S. rebuild its industrial capacity?
Do we need to revisit 1939 to find the answer?