For the most part, I’ve chosen to steer clear off the topic of tariffs and a trade war. However, as I would read story after story relating to a trade war with China, one thing kept coming up in my mind: China would be obliterated by a trade war.
Even if the stories I would read would suggest the exact opposite, that the U.S. should not engage in a trade war with the Chi-coms, my instinct would always tell me that China had really no hopes of winning a trade war with us, especially if our economy is booming, which it is.
I will return to why exactly I suspected China would lose a trade war momentarily. For now, I wish to share a story with you published on Breitbart News titled: “Tectonic Shift in China: Xi Under Fire as China Realizes it Underestimated U.S. Trade Resolve.”
“Chinese President Xi Jinping is facing backlash from within the Communist Party over his hardline stance in the trade dispute with the United States, Reuters reported Thursday,” according to Breitbart.
Reuters reported that: “A growing trade war with the United States is causing rifts within China’s Communist Party, with some critics saying that an overly nationalistic Chinese stance may have hardened the U.S. position, according to four sources close to the government.”
“President Xi Jinping still has a firm grip on power, but an unusual surge of criticism about economic policy and how the government has handled the trade war has revealed rare cracks in the ruling Communist Party…”
“There is a growing feeling within the Chinese government that the outlook for China has ‘become grim’, according to a government policy advisor, following the deterioration in relations between China and the United States over trade. The advisor requested anonymity.”
I’m not surprised at all that the advisor requested anonymity. If the Chinese government found out who was saying these things about China and the government, they would imprison that person and possibly even execute them. There is no freedom of speech there. The only things you can say are things favorable to the government.
Regardless, let’s continue with the Reuters report: “Those feelings are also shared by other influential voices. ‘Many economists and intellectuals are upset about China’s trade war policies,’ an academic at a Chinese policy think tank told Reuters, speaking on condition of anonymity due to the sensitivity of the issue. ‘The overarching view is that China’s current stance has been too hard-line and the leadership has clearly misjudged the situation.”
The significance of this report cannot be understated. If this is, indeed, the case, then this is massive news! The Chinese communists don’t tend to be split about things like this. They are usually fairly unified. So for these anonymous sources to be saying these things about the Chinese Communist Party, that’s a big deal.
Even an article from the South China Morning Post suggests that China should concede defeat to Trump in this trade war. To quote Xu Yimiao, the writer of the article: “Beijing’s strategy of a tit-for-tat retaliation over tariffs has clearly failed. In fact, this strategy escalated the conflict…”
But how can this be? I thought China was supposed to kick our butts in a trade war. That’s what the Left and the fake news media were saying, after all.
Well, it’s really no surprise that the Left would say that we would lose a trade war with China. The Left sees China as a utopia. As such, they believe China’s centralized economy is superior to a capitalist market economy. Even U.S. Senator Brian Schatz (D-HI) claimed last month that China held an advantage over the U.S. in a trade war, and engaging further in this trade war would be “stupid”.
According to Breitbart, “Views such as Schatz’s were common during the Cold War, when many prominent economists and political scientists argued that the Soviet Union’s totalitarian society could prevail over the U.S. Earlier in the last century, some had made similar arguments based on the perceived strength of Nazi Germany compared to the U.S.”
Which brings me to the reason I suspected China would lose a trade war. What do China, the Soviet Union and Nazi Germany have in common? They would use socialistic policies to run every aspect of the government and people’s lives, including the economy. And what happened to two of those nations? They are no longer around… well, not as they used to be.
The reason I suspected China would lose a trade war is because capitalism always defeats communism in economics. Communism would be considered an economic joke if it weren’t so dangerous.
You see, there’s a very clear difference between capitalism and communism/socialism. I’ve even said this before in the past: capitalism creates wealth; communism destroys it.
Capitalism is the enterprise of building more and more wealth through freedom. Communism is the enterprise of spreading wealth around so much that it’s too thinly spread, and the enterprise of making it incredibly difficult to accumulate any sort of wealth. It’s the enterprise of spending other people’s money until there is no more money to be spent.
Under capitalism, wealth belongs to the people. Under communism, the people belong to the government.
I have often talked about China and how they are ranked #2 in world GDP (#3 if you count the E.U.). But you really have to think about why they are in that place.
Well, it’s most likely a combination of having the world’s biggest population (1.379 billion since 2016), so there’s a lot of people to give money to the government, as well as exploitation of what makes the GDP grow. For example, government spending grows the GDP. Part of the reason Obama’s GDP managed to grow around 2% is because he would spend a lot of money and drive our debt sky-high. But while the GDP was “growing”, the economy was stagnating, with high unemployment levels, more people going into welfare, etc.
China is doing much the same thing. They build luxurious ghost cities that no one can afford to move into and use so that the GDP artificially grows to an extent.
Now, I won’t claim to know the intricacies of Chines economics. I doubt vast amounts of spending and having the world’s largest population are the sole reasons for that GDP ranking, but they are significant parts of it. (The other part might be that they use relatively capitalistic economic policies to avoid completely crashing the economy and sinking the country).
What I’m getting at is that no communist country can withstand any sort of economic war with a capitalistic country, by definition. Engaging in trade wars with the U.S. will only accelerate China’s ultimate demise at the hands of their own communistic system.
And this becomes even more true if the U.S. is going through an economic boom, which it is. This, I believe, is part of the reason Trump is imposing and enforcing tariffs on foreign countries. Another part of it is the fact that other countries have been taking advantage of the U.S. because the Establishment believes the U.S. became powerful and wealthy because it somehow stole from other nations and felt that foreign governments taking advantage of us was a form of justice. Trump was having none of that nonsense and decided to embark on making fair trade deals by using the same tactics as the other nations.
But this really would not be suggested for Trump to do if the economy weren’t booming. With a booming economy, we can afford to engage in trade wars to make better trade deals in the future.
A booming U.S. economy combined with the simple fact of life that communism sucks at trade wars, and you can see why I always believed China would be destroyed in a trade war.
And seemingly, people within the Chinese Communist Party are beginning to realize this.
“Whoever oppresses the poor to increase his own wealth, or gives to the rich, will only come to poverty.”
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