This story is a much bigger deal than the attention it's getting suggests.
Why?
Because the post-war global economic system was specifically set up to stabilize strategic target nations by turning them into surplus export economies.
(Thread) https://twitter.com/JohnHemmings2/status/1155561599115001856
A cornerstone of American global hegemony post-WW2 has been an economic system in which developing and developed nations are stabilized by employment in the production of large surpluses for export.
Look at Germany and Japan from the 1950s onward.
Producing big surpluses generates lots of jobs and builds up a mildly-affluent class of people doing those jobs.
That has two salutary effects: the masses get too busy and too prosperous to be bothered with risky things like revolutions and protesting.
The more they are engaged in and profiting from working to create those surplus exports, the more stable their nation is. And the less of a risk they pose to the global order imposed by American hegemony.
Very simple calculus here.
There are some problems with this model, however.
The first, and biggest, is that exports need markets or there is no point in generating them.
If postwar Japan built millions of cars nobody was buying, there would have been collapse and revolution there in short order.
Following WW2, there was really only one nation left in the world with significant accumulated capital and productive capacity: the USA.
In the late 40s and 50s, the US was in export mode, creating unprecedented prosperity and building up a wrecked global economy.
But most of our export markets were poor. Even Europe.
By the 60s, with the aggressive expansion of communism, US export dominance had become a liability. Markets for US goods were not stable.
Wages were up, but inflationary domestic policies were causing big problems.
US industry was becoming uncompetitive at the same time the rebuilt economies of Europe and Asia had geared up to produce surpluses.
What happened next is familiar history.
The USA, as a conscious choice, switched away from surplus production to a financial economy. We went from being the world's biggest exporter to becoming the world's biggest importer of surplus goods from elsewhere.
To pay for it, we not only strip-mined 150 years of accumulated capital, which enriched the powerful immensely at the expense of middle America, we also leveraged that capital to create the biggest inflationary credit expansion of the modern era.
We fucken financed it.
In effect, the USA's biggest (really only) export became DOLLARS.
Which the rest of the US hegemonic sphere imported in vast amounts, trading us their production surpluses in the process.
This accomplished several things:
1. It created pacified working and middle classes in client states
2. It exported US credit inflation
3. It gave the controllers of the monetary system vast wealth and power
4. It impoverished the US middle classes and made them dependent
Problem is: you can only strip-mine a legacy resource for so long before it is exhausted.
150 years of accumulated capital from a continental nation is a gigantic resource. But it is also finite.
Our collective seed corn was entirely spent by the end of the 1990s.
From that point forward, US "wealth" was just a numbers game of piling more credit on top of credit, then exporting it to avoid inflationary problems at home by using it to buy lots of stuff from surplus producers abroad.
That doesnt sound stable, does it.
But short-term, it a pretty good deal for everyone (except the US middle class, who are paying for all of it).
We send massive piles of virtual money to foreigners, and they send us stuff.
They get "money" and pacified workers.
All good.
Foreign nations then have big piles of virtual (and some real) dollars. They can't spend them, really, because what are we selling that they could buy in such vast amounts?
Normally, this would be a huge problem. The solution was really rather elegant: Pax Americana.
USD is only "backed" by two things: the willingness of people to use it as a medium of exchange, and the collective might of the US military.
The former is tenuous and unreliable. The latter is very real, very valuable, and very important.
So if other nations use their dollars to then back their own money ("global reserve currency") then they become part of the collective security zone guaranteed by US military power.
Getting back to China, the market opening which occurred as part of the Deng Revolution allowed for some significant possibilities all around.
China would have access to the US export market so it could bootstrap creating a pacified middle class and grow economically.
The US would gain a massive new market for exporting credit inflation (more than a billion new dollar consumers) and bring China into the US hegemonic sphere via dollar dependency and cultural imperialism ("westernizing").
That was the idea, anyway.
To a certain extent, it worked.
China massively ramped up surplus production for export. This employed hundreds of millions, keeping them busy and distributing enough prosperity to pacify them.
The US got access to a vast new population sink into which we could dump inflation $
China, however, had no intention of allowing the US to use the arrangement to rope them into the hegemony. They saw their own opportunity to take from it to strengthen themselves while weakening the US.
Note the cozy relationships China had with Bill Clinton in particular.
On the US side, our big weakness in the deal was that we had an easily corruptible power elite who needed to keep the credit shell game going no matter what.
China's big weakness was that they could not maintain their surplus economy without the US as a market.
So long as the US power elite could be bought with the proceeds of exported inflation plus cheap labor, China had the upper hand in the deal.
Then a few unexpected things happened.
1. The US power elite got so greedy they killed their own credit scam, starting with the Greenspan Put and getting progressively more insane until derivative apocalypse had to be monetized through "quantitative easing" at the Fed in 2009.
2.The US power elite lost their leverage and the White House (i.e. the Mandate of Heaven).
3. The CCP in China miscalculated their ability to control a rising middle class dependent on foreign markets and money.
4. Chinese labor stopped being cheap.
Here's the kicker: there has been talk for many years about how bad the US trade deficit with China is for middle America. This undeniably true.
However, we have been getting gigatons of stuff from them for decades, and giving them nothing but paper and bits in return.
That allowed the US power elite to loot the wealth of the nation for their personal enrichment.
But it also made China totally dependent on the US for its domestic stability.
Paraphrasing the old saying, if you owe the Chinese Central Bank a hundred billion $, the bank owns you.
If you owe the bank trillion$ and all their employees are dependent on you borrowing, YOU OWN THE BANK.
So long as US leadership was in the pocket of China, it was mutual ownership. Stable.
The Downturn broke the economic stability part of the equation, then the election of @realDonaldTrump broke the political dependency part of the equation.
I mean, why do you think Nancy Pelosi (D - Beijing) is so hysterically anti-Trump? It isn't just ideological.
Power is about interests and control.
Anyway, Trump, being a smart negotiator and businessman, understands that if he plays it right, he has China by the balls.
Without access to US export markets, China is weeks away from economic apocalypse. Maybe months away from a civil war.
See, China made a big mistake in their efforts to try and escape the dependency trap which had been set for them.
They tried to create a domestic market for their own surpluses.
How did they do that? By mimicking the US hegemonic model.
They blew a credit bubble. LOL
The inability of previous administrations to use China's dependency on US export markets was not a lack of capability. It was a lack of will.
China had thought they had bought the degenerate western elites and were safe.
They were wrong.
Trump is willing to play hardball with them, limiting or taxing their access to the one thing they can't survive without: you, the US consumer, who is willing to mortgage your whole future to buy their cheap chinesium garbage.
And even further, Trump realizes something absolutely pivotal:
The United States is now the only developed nation in the world with the ability to grow our economy by increasing domestic production.
That's a game-changer, right there.
Combine that with the fact that Trump's domestic power opponents are totally dependent not just on infinitely-increasing credit inflation, but also on unlimited access to cheap foreign labor, and you have the perfect setup for a showdown.
So, when I see a news story saying that China has cut 2 million jobs in response to Trump's tariffs, and that Chinese banks are being propped up by the CCB, I know Trump is
#winningbigly.