“Trade wars in a global economy”? If that is not an oxymoron I don’t know what is! Every time there is a trade dispute with
China it is amazing how everybody holds their breath. It is not hard to see why the US is having trouble adapting to the global economy, because we have not yet fully accepted it.
Over the years the US has spent so much energy trying to create a global economy that we now seem reluctant to really take part in it. The global economy is very much alive and well and there is no turning back!
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If China wanted to create massive economic turmoil for the US they could do it in a minute by simply dumping all their dollars. It is not there interest to do this, and just as the cold war had a defining moment when Regan and Gorbachev made it clear that neither side could ever win a nuclear war, it is already understood by both China and the US that neither would win a trade war.
There are plenty of BRIC nations that could easily step up and be the catalysts in this global economy.
As the global economy evolves trade disputes need to
be called out and discussed. Just as Democrats and Republicans do not see things eye to eye, China and the USA will have to “air out” their frustrations with each other from time to time.
What’s wrong with holding China’s feet to the fire on trade? China is a strong player and there is nothing wrong with moving them off the plate a little. There just seems to be a lot of people out there so afraid of self defeating protectionist trade policies that they feel Americans should become martyrs in order to defend them.
The US relationship with China is no doubt confusing, but without a doubt mutually beneficial. It is also an evolving relationship. These changes are at the root cause of the economic crisis for it has become apparent that the US/China relationship is not as efficient as it was 5 year ago.
The era of growth sparked by US borrowing from China, in order buy from China did not turn out too well. China’s demand for US debt helped fuel the real estate bubble, excessive leverage, and a shopping spree memory of a lifetime.
Americans are becoming savers and spending less. This relationship is without a doubt evolving and where there is change there are bumps in the road, and it is only a matter of time before China becomes a big consumer in the global economy.
Be certain to take our currency course in order to better understand the relationships between trade and currencies.
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