I woke up to today’s news with yet another article about the trade wars between China and the USA, and its global impact. I think there are more issues than meets the eye, so I’ll spend a bit of time unpackaging.
First, I think the narrative reveals the underlying sentiment of geo-politics for the next 15 years, which is a rising China, a declining USA, and the irrelevance of almost anywhere else. For sure there will be pockets of activity, whether it’s the Middle East or Europe or some other, but gravitational pull will be centered around theses dominating bodies.
As such, their surrounding regions will be affected in much the same way. Mexican and Canadian interests will decline, Korea, Japanese, and Southeast Asia will begin to orbit China closely, and Europe may be further pulled into the China orbit as well. From a historical world order perspective, this is an evolution from the European then USA dominance that we’ve seen for some time.
The trade war will hurt the USA more than it hurts China. The price of goods will rise in both countries, but I believe that China is a net exporter for the USA. Furthermore, the rate of China growth can sustain this slowdown, but the USA rate of growth slowdown may not.
China can expand trade to other countries other than the USA; the other BRICS as one example. By appealing to the establishment of a new alliance and the lack of dependability from the USA, China can normalize its trade outflow in a matter that’s sustainable to its own economy. The USA can do the same as well, but I’m not quite sure who is willing to work with an uncertain USA.
Am I arguing that after these trade wars the peace can be achieved with China as the new superpower? It certainly can be possible, and the USA isn’t doing any favors to itself.
I think there are opportunities in this new world. Those individuals and institutions that can go across economies and borders will be better poised than those that don’t. As we’ve seen by the Rothschilds and how they’ve profited by their intense information sharing across five of the most important European economies at the time, networks that are similarly linked will look into this new world with enthusiasm.
I also think that tech will be generally well insulated relative to other industries. There are less fixed and material costs associated with tech development, so theoretically the negative impact is capped.