Culturally, the Chinese hate losing face. Unfortunately for them, with trade war 2.0 rapidly surging in magnitude, they’re about to lose a lot of it. That’s not to say that we won’t take some heat because we most certainly will. However, escalating tensions will have one main loser: the Chinese economy.
Quite frankly, the alternative-investment community’s slobbering love affair with our eastern adversary was always a curious point for me. Enlightened gurus and pontificators would wax poetic about China’s ownership of our debt obligations. In the same breadth, these folks would turn on the U.S. for its profligate ways.
We’d also hear “experts” rattle on and on about China’s historical relationship with gold as a reason why modern investors should jump onboard. Honestly, who gives a flying crap what the Chinese of thousands of years ago felt about gold? It has no bearing on modern investing strategies.
Thankfully, the current trade war has one bright spot: it exposes the Chinese Communist Party for the corrupt dirtbags that they are. For decades, these lying miscreants abused our trade laws and our intellectual-property rights to prop up their economy. Now, when we have an administration that finally called them out on it, they cry victim.
It’s the same juvenile antics that a six-year old plays frequently. But now that the communists want to play hardball, the U.S. has no choice but to throw them some “chin music.” As I said, that will hurt us. But it will surely cripple the Chinese economy.
The Chinese Economy Is the Ultimate House of Cards
The Chinese are masters of nothing except the cheap production of crap. Think about it: what does China’s vaunted manufacturing base produce? Cheap junk goods that they market to dumb Americans via Walmart.
Westerners often resign themselves to the fact that the Chinese machinery is superior to theirs, but why? They haven’t invented anything. The entire Chinese economy is built on the innovations of other countries. What this trade war really revealed is that we’ve been trading with someone who uses dishonest scales.
As a result, if the Chinese leadership insists on fighting this trade war, they’ll end up the losers. America doesn’t have a manufacturing base like it used to because we don’t need one. Our new manufacturing base is technology and innovation.
Why China is playing tough right now is because they know it’s game over for them: they can’t steal intellectual property brazenly like they used to. Instead, they’ve got to come up with their own innovations.
That won’t happen because they’re incapable of doing so; otherwise, they wouldn’t need to cheat to prop up their fake Chinese economy.
So yeah, let them fan the flames of the trade war. It’d be the last mistake they ever make.