Everyone’s talking about how the U.S. trade tiff with China looks like it’s turning into a trade war.
Frighteningly, hardly anyone’s talking about the real war between fundamentally different frenemies.
Today, we’ll cover how the trade war is manifesting itself throughout U.S./Sino relations.
They Did What They Had To
You can and can’t fault China for doing what it did – lie, cheat, and steal to grow its economy.
What the Chinese government had to do was, at breakneck speed, placate then promote its formerly ideologically communist-driven citizenry into transitioning from a command economy into a centrally-planned, quasi-capitalist, cum-entrepreneurial-juggernaut of a nation.
That seemingly impossible transition was made possible by gaining admission into the World Trade Organization (WTO) in 2001.
America and the rest of the world wanted access to Chinese markets, as they were hopefully going to grow into a gigantic consuming nation. And the Chinese wanted access to all the technology and capitalist know-how available to them through WTO relationships.
Letting China into the WTO was the key to opening Chinese markets and got China access to everything it needed to grow in the brave new world of breakneck technological innovations.
The Chinese economy grew by geometrically leveraging their trading partners’ know-how and technologies, who mistakenly (or foolishly) thought the WTO would protect them from Chinese cheating and theft.
Like I said, in the context of what China was trying to do, you can’t blame them. But you have to because they lied, cheated, and stole.
It should be pointed out that most of China’s “trading partners” knew what the Chinese were up to. They just wanted what they wanted from the Chinese.
That is, until the growth and power pendulum swung in China’s favor, starting about 10 years ago.
That’s when the real balance of trade changed.
That’s when the WTO should have started clamping down on Chinese cheaters and thieves, but they didn’t.
You can and can’t fault the WTO and China’s trading partners for not protecting themselves, for allowing China to grow at the expense of its trading partners’ trade secrets and free markets, because everyone knew what was going on.
The extent to which China has lied, cheated, and stolen to grow its economy, enrich its people, and develop its power as a nation has been known for a long time – for at least the last 10 years.
Thank goodness for Donald Trump.
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Whatever you think of the President, he is so far showing unparalleled guts confronting the Chinese.
But the trade war is only one front the President’s administration recognizes it needs to fight over.
The enormous wealth China’s created has also given it the wherewithal to exert itself geopolitically with one primary goal: to challenge the United States as the only other real super-power on the planet.
That’s what investors don’t see.
The so-called trade war is just the tip of the iceberg – there’s much more beneath the surface.
Not the least of which is the recent debacle involving China’s latest “carrier killer” missile that could tip the balance of power in the South China Sea. You can learn more about that here.
America and China are facing off on many fronts and shots across each other’s bows over trade battles could easily trigger bigger blow-ups.
Investors don’t see it because the markets keep managing negative news regarding the trade tussle.
But the Administration is pushing behind the scenes on a host of other far more serious global issues the U.S. and China are challenging each other over.
If the trade war isn’t resolved, the tug of war over all the other larger, more dangerous issues China and the U.S. are stockpiling, could send stocks down a dark hole no-one dares venture down.
You’ve been warned.