On Us-china trade war
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.