Future 101: Tom Friedman on China and the Trade War

[Gadianton]

It's a question of momentum. Can the world turn on a dime? China certainly hasn't been able to re-write the world order while acutely aware of the problem. The US becoming a sudden villain doesn't make China fundamentally trustworthy. They have a massive opportunity, this is for sure.

The irony here is the current administration never needed tariffs to change the balance of trade, they only needed to burn their credibility such that dollars sells off, other currencies rise, and American goods become cheaper. Many finance types talk about the "Mara largo Accord" -- the strategic lowering of the dollar (there's obviously nothing that's played out strategically here, that's for sure, I'm just reporting what's said). However you slice it, the dollar must lower to balance trade, and if that correlates to less faith in the US as a strong institution, then so it was with the more structured Plaza Accord.

Anyway, if the investment types are correct, the current selloff is temporary, and the dollar will rise again. Whether this is due to American strength where America snaps back due to efficient evaluation, or due to the momentum of the world order, and America has the power of a rent-seeker, I don't know. But the point is, if other nations dig in their heels, and we don't back down either, the belief is that we will crush the world. This is certainly a hollow victory scenario.

[Gunnar]

I watched the video last night. There are a lot of theories on China. I don't know who is right. I unfortunately think the current administration envies China a great deal and sees it as a model for the US going forward.

Except they reject out of hand China's remarkable and commendable initiatives and advances in green, environmentally and economically sound technologies.

[Moksha]

China has already won, and this will be its century. It has built a futuristic and gleaming infrastructure. The Renminbi will eventually replace the Dollar as the currency to hold. We need to forge partnerships rather than waging a lost Cold War. Instead, we are alienating the rest of the world.

Speaking of Future 101 - Let's hope that Trump's big announcement isn't the Last of Us, will now begin.

[Kishkumen]

At this point I'm actively cheering for China.

I’m not.

[Moksha]

Speaking of Future 101 - Let's hope that Trump's big announcement isn't the Last of Us, will now begin.

Not sure. It might be that Jennine Piro will be the US Attorney for the DC Office and that she will have a refrigerator stocked with wine boxes in her office.

[Gadianton]

The world may be going into a stalemate and multipolar malaise and it's ultimately ideological in ways I wouldn't have expected.

I think those focusing on the dollar and its reserve status are right to do so. The question that predates the current administration is whether China can usurp the the dollar as the world's reserve currency. The present administration mistakenly has assumed the question is, can China usurp the US as the world's great exporter? And from there is the possible assumption that reserve status follows. Stephen Miran, the smartest by far on Trump's team (and let's not forget that Hound, Binger, Bill, Ceeboo, Markk, and msnobody do not know what a tariff is, but they might know more than Trump and his entire cabinet save Bessent and Miran (and Bessent barely knows more than they do at this point, as his hedge fund has lost 90% of its value over the years)) detailed ways that the US might pull off keeping reserve status while reclaiming some of its status as an exporter. If I had to criticize Miran's theory, I'd say his suggestions for maintaining power run into the question that honorentheos (who knows what a tariff is) posed:

What does it mean "the US is strong?"

This is where it gets so weird, because on the face of it, you'd think Heritage Foundation would understand this better than anyone. I follow their list of top-ranked countries for economic freedom, mainly because of the irony that their top pics always end up as "socialist" -- national health care, little to no gun rights, and all the things right-wing culture warriors are bent out of shape over. Foremost in Heritage's theoretical assessment of a country is its guarantee of property rights. It's so weird then, that they are blind to their own agenda, which is essentially to destroy the US as a "strong country" by the terms they themselves have established over decades.

Project 2025 has become in practice, the blueprint to instantiate the political right's envy of China. Trump and his team of grifters believe that China is winning, and that the US can only fight back by out-China-ing China. Moksha is wrong to root for China. China is way worse than the US is. But this envy is a two-way street. China envies the US's historic hard and soft world power (to be fair, the US hasn't always been a force for good in the world, far from it). China is an authoritarian nightmare, but, it has done some self-reflection over the years, and it does understand that its perspective that the world exists for the benefit of the top CCP leadership is a problem for the rest of the world. It's encouraged entrepreneurship, it encourages tourism, it's silk road projects have tried to be more "American" in their terms than America's terms have been with developing countries, and it (apparently) is even coming to grips with the backlash of investors due to its heavy-handed and poorly communicated treatment of Jack Ma.

As the United States sort of is, China knows it must at least appear to become. While as China is, the US under Trump is trying to become. China's payment system CIPS, BRICS, and whatever else China dreams up, are all meaningless if China does not come to understand what Heritage Foundation understands in theory, that property rights must absolutely be guaranteed. Trump is a godsend to China for this reason. They have their moment, but it's highly questionable the CCP will rise to the occasion. Could the CCP ever have an independent reserve bank? You know, it's hilarious, because the list of people I mentioned have no idea just how terrifying it is to investors when Trump threatens to fire Jerome Powell. They think, "but we voted for Trump and people have to do what he says." The dollar is the reserve currency in part because that is not the case. Trump's regime is ultimately an assault on property rights. But to be fair, being the world good guy is not without its steps that lead to this situation, such as cutting Russia off at SWIFT. Property rights are best guaranteed by the amorality of what used to be a Swiss bank account.

And so the questions really are, can China rise to the occasion? That will require far more than simply outproducing the US at lower costs. And can the US avoid collapsing into anything that remotely looks like Chinese authoritarianism? Because the US is outnumbered substantially, and it doesn't need to fall much in order for the world to seriously give the rising power, China, a try. Where I perhaps disagree with honor, is that it isn't clear to me that China has done enough to secure the trust of its investors and I have a hard time believing they ever will be willing to do so.

[Gadianton]

No, there is no such thing as truly "clean coal". While technologies like carbon capture and sulfur scrubbers can reduce emissions from coal-fired power plants, coal combustion inherently produces pollutants and greenhouse gases like carbon dioxide.

Ah interesting. The economy breaking tariffs, assaults on rule of law, and unprecedented open corruption not to mention the clown show for the rest of the world was just a distraction. We're getting clean coal. And that's something nobody is talking about. Maybe it's all worth it now?

[Gadianton]

Anything else is discounted as supporting Trump because he's literally Hitler

I've explained many times that Trump is not Hitler. Putting words in all caps doesn't help your case that you are the one staying objective. I wonder if you actually read the posts you criticize as emotional thinking. Were the posts I've written explaining why Trump isn't Hitler examples of emotional thinking? Maybe you didn't read them, and just assumed what the content was, based on the fact that I've criticized Christianity and the present-day conservative movement.

[Gadianton]

I honestly had no idea so many Americans were retarded. I think there has to be too much lead in the American water supply for Americans to be this stupid. How many excuses for Trump are we going to endure before calling a spade a spade?

You jest:

https://www.youtube.com/watch?v=IV3dnLzthDA

[honorentheos]

Where I perhaps disagree with honor, is that it isn't clear to me that China has done enough to secure the trust of its investors and I have a hard time believing they ever will be willing to do so.

Hi Gadianton,

Apologies if I suggested I believe the yuan will replace the dollar as the reserve currency of choice. I also don't see that as likely given Chinese interest in currency manipulation and not relying on strengthening individual purchase power to drive consumption as an engine for economic strength. Their current economy relies on being weak against a global reserve currency. I don't have a crystal ball, but I suspect that as the stability of the dollar is further called into question we will face more regional competition that mirrors a more multipolar geopolitical balkanization reflective of the 19th and early 20th Century. The Euro is already our closest competitor and likely to only gain favor in a post-global economy. But whether the Euro overtakes the dollar in reserve holdings in Africa or Asia? Hard to say.