On Us-china trade war

The Punch - - MY NEWS.COM -

Olu­dare Taiwo, lekki, la­gos state: China holds $1.2tn of the United States debt stock. So, I re­ally don’t know how the US thinks it can win a trade war against China.

No doubt, China en­gages in ma­nip­u­la­tive cur­rency prac­tices, it is a known fact that the US can­not do much to make China revalue the Yuan ap­pro­pri­ately.

The first time I came across China’s ma­nip­u­la­tive cur­rency prac­tices was in Lee Ia­cocca book, “Ia­cocca: The Au­to­bi­og­ra­phy” ex­actly 30 years ago.

I had strayed into my dad’s li­brary as I used to do, not look­ing for books on aca­demics, but bi­ogra­phies, au­to­bi­ogra­phies and pol­i­tics.

I had just fin­ished Vol­ume 1 of Win­ston Churchill’s bi­og­ra­phy by his son, Ran­dolf Churchill, and I was look­ing for the Vol­ume 2. My dad didn’t have the Vol­ume

2 on the shelf, I doubt if he even­tu­ally bought the vol­ume.

Out of frustration, I de­cided to get hold of an­other one. There, sit­ting on the shelf, was Ia­cocca’s.

A whole chap­ter of Ia­cocca was de­voted to China’s cur­rency ma­nip­u­la­tive prac­tices. Ia­cocca made the fight to get China price its Yuan ap­pro­pri­ately a life long fight with­out suc­cess. He gave up even­tu­ally.

Pres­i­dents from Jimmy Carter to Don­ald Trump have re­alised that China will keep tak­ing the US for a sucker as long as there is enough liq­uid­ity to keep mop­ping up the dol­lar thereby cre­at­ing ar­ti­fi­cial scarcity in the mar­ket, which helps drive the ex­change rate of the dol­lar against the Ren­minbi up.

China has a bal­ance of trade sur­plus against the US of $375bn in 2017. Ok, that is crazy, I agree.

If Trump doesn’t bor­row him­self some sense as his pre­de­ces­sors did against China, the Asian coun­try will crash the economies of many of the US states.

China bought $14bn worth of Soya beans from the US last year.

While it has threat­ened to hike du­ties on goods like Soya beans and plane parts by 25 per cent,

China has the ca­pac­ity to re­im­burse its cit­i­zens who ex­port to the US with the ad­di­tional 25 per cent hike in the US tar­iffs to en­sure that Chi­nese goods are sold at the same price be­fore the hike thereby negat­ing the plans of the Trump gov­ern­ment to make Chi­nese goods more ex­pen­sive in the US mar­ket, which would have given Made-in-us goods some com­pet­i­tive edge.

Don­ald Trump and his ad­vis­ers need to learn from his­tory. You can­not win a trade war against China.

They will go for the US jugu­lar.

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.