Economy

China is Going to Replace What They Buy From America

JM Ashby
Written by JM Ashby

Trump's trade war has been about as well received here in America as the GOP's tax cuts have been, but how is it playing out in China?

Following Trump's announcement that tariffs on $200 billion in Chinese goods will be imposed next Monday, China's state-controlled media said they're going to focus on replacing imports.

To make matters clear, this was published in the ruling government party's overseas edition newspaper, meaning it would be been distributed in Washington.

“To deal with the trade war, what China really should do is to focus on doing its own thing well,” said the [People’s Daily newspaper], which is published by the ruling Communist Party.

“(China) is not worried that the U.S. trade counter measures will raise domestic commodity prices by too much but will instead use it as an opportunity to replace imports, promote localization or develop export-oriented advanced manufacturing,” it said.

The Global Times tabloid, which is affiliated to the People’s Daily, said the trade war was a chance to pursue greater global recognition of its financial markets and that it could open its A-share market more to listings by Western firms.

What this means is China is going to stop buying American products. They're going to buy what they need from other countries instead (or manufacture it themselves) and they're going to open up market access for foreign financial institutions while excluding America institutions.

Why does this matter?

It matters because the Trump regime is bailing out American farmers who've lost access to the Chinese market. China is the biggest consumer market in the world with a population of nearly 1.4 billion people and a growing middle class that is already larger than American's middle class in number.

Trump is bailing out soybean and sorghum farmers because the market for nearly 60 percent of their crops has been cut off. China has replaced American soybeans with Brazilian soybeans and, while American farmers have started selling more to the European Union, the European market can't make up for losing access to China.

China could potentially stop buying all American exports with few exceptions and replace them with exports from other countries who aren't embroiled in a pointless trade war.

The Trump regime has said their bailout for farmers is only intended to make up for losses suffered during the current harvest season, but it's not as if this will be resolved next year or even the year after that. This could be permanent and the agriculture industry is just one example. This could happen to every industry. Is Trump going to call for bailing out every other industry, or just farmers?

The next president will likely to have to make some concessions just to get out foot back in the door.

  • muselet

    The pieces in the People’s Daily and Global Times constitute a shot across the bow. Is there anyone, anyone at all, in this administration who understands the implications of this?

    –alopecia

  • mnpollio

    I do not have an ounce of sympathy for the farmers of America, who by and large voted Trump and cronies into office on the “Make America Great Again” platform. Well how great is it now? The problem is that they probably will not deign to notice until Trump is out of office (Lord, let that be sooner rather than later) and then blame his successor for the problem, especially if said successor has a (D) behind their name.