After suddenly rising tensions brought about another trade war between the U.S. and China, you could almost hear the chorus of “I told you so” ring out. That is, contrarians within the alternative-investment community have typically viewed China as the rising dragon. Now, it’s their turn to control world affairs.
Or so it may seem. What you don’t find are people forecasting the U.S. to emerge the decisive victor in the trade war. If you listen to alternative-media programs like Infowars, you’ll come across a consistent theme: the U.S. government – superseded by nefarious globalists – is bad. Everyone else, including communist China and capitalist-in-name-only Russia, is good.
However, the reality is much more nuanced than this simplistic contrarian vision. Sure, many if not most signs point to the decline in American hegemony: spiraling national debt, rising internal and external conflicts, government not acting in the interests of the people. Many will also reference Biblical passages that support the idea of an imploding America.
But here’s the deal: no one besides the U.S. has superpower capacity. To become the world’s preeminent economic force requires more than just a clean balance sheet. You must also have demand: demand for your products, services, even down to subject attributes like language and culture.
If you really think about it, China has none of the qualities that define a superpower. Therefore, I don’t see them winning this trade war.
China can Only Score a Moral Victory in this Trade War
At first, my assertion sounds out of place. It’s we the American people who are indebted to other countries, not China. Furthermore, we leverage our world’s reserve-currency status and military might like bullies to get what we want. Why then should we win this trade war?
And that’s what teases many contrarians to sympathize with China, and to believe they’ll come out on top. Unfortunately for them, the only victory that the Chinese will see from this conflict is a moral one. From a real fundamental perspective, the deck is stacked too high against the Asian juggernaut.
People trust the dollar, including many Chinese. People also clamor for the latest gadget and gizmo from the U.S., including most Chinese.
You can’t, however, say the same thing about Chinese products. No one is jumping over themselves to acquire the latest smartphone from China. Ditto for cars, fashion, educational institutions…what have you. Consumer demand is not a two-way street here.
The only thing with which China can compete effectively with the U.S. is cheap (often knockoff) products. But the problem here is that price is easy commoditized: one just needs to find something to cut to prop up margins.
It takes true talent and creativity to forward innovations. This among many other areas is where the Chinese lack. Subsequently, it will keep them from getting the number-one slot, even though it appears they “deserve” it.