Trump on China and the Middle East

Because Dr. X asked, and I’m foolish enough to think I might have anything worthwhile to say, let’s look at Trump’s comments on why he should be our next President.

On the trade imbalance with China: “They don’t have the cards. We have the cards.”

No, I think China has the cards, and here’s why.

  1. First, China’s a major loaner of funds to the U.S. to help us engage in massive deficit financing. They’re not going to dump that debt, as some scaremongers fear, because then they’d lose their shirts and pants on the investment. But they could stop buying US securities, and then we might have to pay more interest to get more securities sold, which means financing government will cost us more. (Keep in mind neither Obama nor the Republicans are talking about reducing the deb, just the deficit–i.e., reducing the rate at which we rack up more debt.)
  2. Second, China doesn’t need our market as much as they used to. They have both a growing internal consumer goods market and have surpassed the U.S. as the largest trading partner for Brazil, which, with a population of nearly 200 million and a GDP per capita that has grown 31% since 1990 (surpassing Mexico), has the world’s 9th largest economy.

  3. Source: World Bank. The values are in constant 2000 U.S. dollars. In current dollars, Brazil’s GDP per capita is between $8,230 and about 1100$, depending on who’s counting. The latter number is by purchasing power parity, but I’m not sure about the prior one, which I suspect is by exchange rates (PPP is a better measure).

    On the price of gasoline: “We can’t pay $108 a barrel [for] oil. It’s sapping our country.”

    No, yes, and what could he possible do about it? High oil prices do sap our economy because so much of our economic activity runs on oil. However we can pay $108 per barrel. It’s an issue of what we don’t want to do, not what we can’t do. And what action can a U.S. president take toward oil exporting countries that would actually reduce oil prices? The one action I can think of is nuking China from end to end, totally destroying the country, to eliminate its growing demand. Since Trump isn’t going to do that, his ability to affect oil prices as president would be about as much as Carter’s, Bush’s, Clinton’s, Bush’s or Obama’s. If there was some magic strategy, I suspect one of the last five presidents would have figured it out. And do we really need as president a businessman who doesn’t understand the concept of supply and demand?

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About J@m3z Aitch

J@m3z Aitch is a two-bit college professor who'd rather be canoeing.
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8 Responses to Trump on China and the Middle East

  1. Lance says:

    This is just Trump’s latest ego driven excursion into narcissism. He’ll be on to his next, or maybe third, self-indulgent publicity stunt by November 2012.

    Also, he has about as much chance of being elected President of the United States as Flavor Flav.

    But your point about China not needing us because they have Brazil maybe a bit out of whack. Saying that Brazil has the worlds ninth largest economy is like saying that Pluto is the ninth largest planet so Jupiter should be looking over it’s shoulder.

    US GDP is14.6 trillion while Brazil’s is 2.09 trillion. I’m not saying that they aren’t important as an economic trading partner but China could not sustain anything like it’s current level of economic growth by losing the US and adding Brazil.

  2. James Hanley says:

    Lance, true, but that’s not the whole of it. There is no chance China would totally lose the U.S., and it is not only gaining Brazil but it is gaining China as well.

  3. Lance says:

    Hopefully the US will be gaining China as well.

    Buick, of all brands, has sold over two million vehicles in China.

    According to Autoblog,

    While Buick has struggled as a brand here in the States, the marquee(sic) has enjoyed blockbuster success in China. Buick was a smash success in China in the 1930s, as provincial presidents and emperors chose the brand over more austere offerings from the likes of Rolls-Royce and Mercedes-Benz, and it appears some of that goodwill has been projected into modern times.

    Who knew? A Hunan chicken in every pot and a Buick in every garage.

    I know that you were just debunking Trump’s blustering xenophobic nonsense but a strong Chinese market is probably a tide that lifts all ships. If the Chinese government realizes that protectionist trade policies are not in its long term interests.

    Also, in harmony with the Syria thread, informed and educated consumers are not very tolerant of totalitarian regimes.

  4. James Hanley says:

    I agree wholeheartedly that a strong Chinese economy is good for us. But would we gain the Chinese market if Trump followed through on his bluster? (Which, fortunately, I don’t think is a very plausible outcome.)

  5. Dr X says:

    James,

    In addition to our dependence on Chinese loans, your last comment points to a political problem that Trump doesn’t notice or pretends not to notice: American businesses have been working for a long time to make inroads into the enormous Chinese marketplace. They would never stand for a move that could trigger retaliation that would damage both their existing investments and plans for the future.

    Given that nobody holds ALL the cards, what Trump is proposing is a game of economic chicken that would, at best, result in a Pyrrhic victory.

    Is Trump a complete fool or is he speaking foolishly because he’s courting fools? Perhaps some of both?

  6. James Hanley says:

    Is Trump a complete fool or is he speaking foolishly because he’s courting fools? Perhaps some of both?

    You’re the psychologist, I’ll let you handle that one.

  7. DensityDuck says:

    American business are making inroads into China…by building factories in China, and hiring Chinese to work in them, and buying raw materials from Chinese suppliers, and getting parts from other Chinese factories staffed by Chinamen…and so on. All that comes back to America is money, and most of that goes to the businessmen who tell the Chinese factory managers how many cars of which color to make. Meanwhile, everyone else in America is standing around wondering where the jobs went.

    But hey, the absolute number of dollars coming into America goes up because of that, so it must be a positive result, right?

  8. James Hanley says:

    What do you think businessmen do with those dollars that come back to the U.S.? (To be correct, though, it’s actually Renminbi that come back, unless they get converted in the international currency markets first.)

    And no, American workers are not losing jobs when American companies create jobs in China creating things to sell in China that were not previously produced and sold.

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