Why is Trump scared about the trade situation with China? Is it the robots?
Back in World War Two, America put 16 million soldiers into uniform and sent them to the front line.
They couldn’t do it again.
Why not?
Well, back then, America had a solid textile manufacturing sector. Gear that sector into overdrive and you can produce the millions of uniforms necessary.
These days, there’s no textile sector, just like there’s no textile manufacturing in Australia anymore. In fact, that sector was one of the first to be completely ‘off-shored’.
And so if America wanted to put sixteen million soldiers into uniform, it would need China’s help.
And that’s great if China is on the same side.
But what if its not?
Trump's questioning the whole free-trade edifice, and in the process copping the usual criticism from people falling over themselves to label him a racist.
But what I think he’s realised is that the whole-free trade fantasy is based on an idea of enduring global peace.
It’s fine to send all your vital industries overseas, because, hey, they’re our friends, and of course they’ll sell us what we need.
It’s a lovely ideal, but it is a little crazy.
In the early days, the free-trade mission was advanced by trading blocks – groups of like-minded nations who were already closely bound by ideology.
Take Australia and New Zealand for example. There’s no danger in NZ letting us produce dairy and sheep because of course, we would help our cousins out if they needed it.
(Until we hollow out their economy and conquer it in the name of the glorious Malcom. Buwahaha.)
And as nation-level conflict went out of fashion, and local businesses realised there were some sweet profits to be made, the circle of free trade expanded.
But then along comes Trump, who love him or hate him, is less beholden to big business than any President in living memory. And he looks at this, and says, aren’t we making ourselves just the teensy bit vulnerable?
He’s probably looking at this chart here.
And that chart says that the trade deficit with China is freaking massive! Pretty much more than all the other countries combined.
Are Americans ok with that?
Because what it represents is a massive export of wealth. Even if you’re just printing the money, it’s got to become real somewhere, and even if it’s just a claim on wealth, all those claims are currently being sent to China.
How does that end? How does it end well?
But the free-trade ideologues sponsored by the various big business councils would say, hey, no worries. When countries have shared economic interests, peace follows.
But what if China’s economic interest is in eroding America’s economic base and ultimately replacing it as the dominant global force? That’s not such a peaceful scenario, Pollyanna.
But perhaps we shouldn’t be too worried. It’s not like China is amassing a robot army.
Oh no hang on, they are.
Global Stock of Robots
This chart says that China has more robots than the rest of Asia combined! Ok sure, those robots are more likely to be car automations than killer-drones, but that’s just the point.
Right now, America is exporting a huge amount of wealth every month, with which, China is building incredible productive capacity.
How does that possibly end well?
That’s what’s keeping Trump up at night.
Such a racist.
Bill says
You’re right Jon, that’s why America and Australia should be looking to make stronger ties with India. (No I’m not Indian!) There are problems there too, but at least they are a democracy of sorts.
KiwiAl says
Great article Jon.
If he realised it for himself, good on him.
But there’s very little he can do about it. No point him losing much sleep over it.
The American society [all 325 million of them] expects a high standard of living. They are willing to spend their life savings and more to maintain it. (Uhhh, they already have, with a $20 Trillion monster that will soon be absorbing 50% of the US (Income?) Tax Take to keep fed. And that’s just the Interest!)
The Chinese at 1.4 billion, are mostly still miserably poor. They are used to it, but ALL want better so they WORK like demons to get it. And they are clever.
Plus, they don’t have the ridiculous “Democratic” political system, with its one step right, one step forward, one step left, half-a-step backwards way of making slow progress to handicap them. They have a single party system which keeps on more or less the same path, year after year. No stopping to worry about a few human rights issues or a bit of pollution…
China will trample us all. No point worrying about it. Just go look at the infrastructure projects they are working on (24 hrs a day, 7 days a week), while the US infrastructure is crumbling – huge country, but not enough people prepared to work.
The Indians – well, there are lots of them too, but they are too busy overcharging everyone and delivering a poor product while half of them stand around all keeping an eye on the till. They think they are smart when they cheat, but don’t realise that every person they rip off doesn’t want to deal with them again. And just try getting a refund out of an Indian!
Meanwhile the Chinese bend over backwards to make sure you are happy and ready to place your next 100 orders with them. I know which I prefer.
Yep, we live in interesting times!
Pauline says
The worst thing Australia did was to drop the tariffs and allow the manufacturing to go off-shore. We lose the jobs, we lose the self-determination and we hand over future control of all of our purchasing to China. China does not care – it will produce trains that do not fit on our tracks and still expect to be paid, it will produce dam flood gates which do not fit and still expect to be paid for it – the worst part is that the governments do not take the Chinese manufacturers to task and make them fix the issues – they just pay and have to try and ‘fix’ an issue which then costs the tax payer more money than if it had been produce here in Australia – giving Australians employment and keeping the money here. Blows my mind!