You seem to try to take an even hand but there is no moral equivalence between the US position and China’s dream. The US wants to put China down, to put this bluntly. China just wants to get along with the US while improving the lives of her people.
The conflict is between the American Dream, which may be dead, and the China Dream, which is very much alive.
The Chinese have all the most important cards, which are the domestic. political ones.
Xi has virtually unanimous support from his people (at least publicly), while Trump has barely half. Xi has De facto lifetime tenure and the Party has no competition, while Trump has four years at best, a vibrant and energized opposition, and even his own party is breaking ranks on tariffs.
Mr Roach, I followed your writing back in the day at Morgan Stanley. I graduated 1980 with an MBA at Washington University, St. Louis. A big step up for a farm boy, blue collar line worker at Chrysler. The school taught the benefits of free trade - Let the world manufacture goods in the most efficient place, trade with each other and all will benefit. And, that is pretty well how the world economy has played out this last 45 years. The world, ex USA has built things and US retail has bought those things. In return, the world(ex USA) has taken their manufacturing profits and bought US financial assets. US government has benefited by funding the sale of their treasuries at a lower rate. The US public has benefited from the lower rates as well. Who needs to watch their spending when money is cheap and you can afford the monthly payments. The US, has had a few crises along they way as retail got over their skies in 07-08, but baring a few exceptions, US gov picked up tab, and basically made the bank sector whole. In addition to the banking C suite coming being unscathed, the overall business C suite has done quite well for themselves. Profit margins of US companies that moved production overseas grew. The publicly listed companies benefit was further amplified with a rising stock market. And so here the US finds itself, with a 6 1/2% budget deficient, a balance sheet with the most debt ever, and rising interest rates that will significantly increase the debt service expense. All created during a period of full employment.
(I am making the numbers up, but confident the point is valid) In 1980, the average CEO made 20- 30 times of their average employee. And now guessing the average CEO makes 100 - 200 times. And this here is where I believe the free trade theory has broken down. The benefits of free trade were not equally shared among the US population, compounded by the government encouraging the population to spend, spend, spend. And so we have the MAGA movement.
In my view, you are spot on, boiling it down to a Trump / XI standoff and find the situation frightening. Hoping I am wrong, but believe, as you do, the world is likely to suffer.
Yet, something needed / needs to be done, the US was on an unsustainable path. I appreciate your work. Thanks
Agree with that. You can de-personalize the analysis as much as you want but the numbers won’t change! The question for China is how will they handle >10% of their GDP disappearing if exports to the US essentially decline to zero? Europe will try and avoid acting as a dumping ground at all costs. For the US, Trump has bet the farm in driving down the 10 year to <4% and so far at least he’s failing bigly. In the end deals are made more out of desperation than desire, so I expect a truce of sorts at some point which enables both parties to sell as a win.
Look, it is insane for our great nation to allow this man to undertake a trade was on his sole decision. It is the same with nuclear command authority. Congress and the courts must act immediately to make it clear his so-called “emergency authority” is revoked and must be approved by Congress.
Our Burger King in the Gold House has lost his mind due to the onset of Neurosyphilis and cannot be allowed to continue this assault on our nation.
To all those you voted for Trump; “You own this mess. Now make it right.”
I don’t know how it’s going to end. However after listening to how Trump supporters think it’s going to go, I’m 100% sure that’s not going to happen. They are confident in capitulation from the rest of the world. China will say it’s there generation’s turn for the “long march”. If Trump doesn’t get his way quickly he’ll bleed out in the long run unless he doesn’t quickly reverse course or congress takes his “emergency” powers away
China needs to structurally pivot from an investment driven growth model to a consumption driven one.
such pivot is not easy. it requires transferring income and wealth from the corporate and govt sector to the household sector. despite the omnipotence of the party and Xi, resistance to reform still exists.
however, in the presence of a foreign bully, it may become relatively easier to rally national spirit and perseverance, unite all sectors behind a common, and prosperous goal.
policymakers in Beijing should not let this opprty go to waste.
Xi is a dictator with Mao's totalitarian mentality; he is going to bring China down. Personal gain is his first and last objective, like all dictators around the world, and being calculative is just a myth.
Thanks for the perspective. The only issue I take with it is the attribution of dispassionate discipline to the Chinese actions. True that relative to those of the US, China's reaction may appear to be dispassionate, disciplined and rooted in conviction. But China's actions towards other countries a decidedly less dispassionate.
You seem to try to take an even hand but there is no moral equivalence between the US position and China’s dream. The US wants to put China down, to put this bluntly. China just wants to get along with the US while improving the lives of her people.
The conflict is between the American Dream, which may be dead, and the China Dream, which is very much alive.
The Chinese have all the most important cards, which are the domestic. political ones.
Xi has virtually unanimous support from his people (at least publicly), while Trump has barely half. Xi has De facto lifetime tenure and the Party has no competition, while Trump has four years at best, a vibrant and energized opposition, and even his own party is breaking ranks on tariffs.
Mr Roach, I followed your writing back in the day at Morgan Stanley. I graduated 1980 with an MBA at Washington University, St. Louis. A big step up for a farm boy, blue collar line worker at Chrysler. The school taught the benefits of free trade - Let the world manufacture goods in the most efficient place, trade with each other and all will benefit. And, that is pretty well how the world economy has played out this last 45 years. The world, ex USA has built things and US retail has bought those things. In return, the world(ex USA) has taken their manufacturing profits and bought US financial assets. US government has benefited by funding the sale of their treasuries at a lower rate. The US public has benefited from the lower rates as well. Who needs to watch their spending when money is cheap and you can afford the monthly payments. The US, has had a few crises along they way as retail got over their skies in 07-08, but baring a few exceptions, US gov picked up tab, and basically made the bank sector whole. In addition to the banking C suite coming being unscathed, the overall business C suite has done quite well for themselves. Profit margins of US companies that moved production overseas grew. The publicly listed companies benefit was further amplified with a rising stock market. And so here the US finds itself, with a 6 1/2% budget deficient, a balance sheet with the most debt ever, and rising interest rates that will significantly increase the debt service expense. All created during a period of full employment.
(I am making the numbers up, but confident the point is valid) In 1980, the average CEO made 20- 30 times of their average employee. And now guessing the average CEO makes 100 - 200 times. And this here is where I believe the free trade theory has broken down. The benefits of free trade were not equally shared among the US population, compounded by the government encouraging the population to spend, spend, spend. And so we have the MAGA movement.
In my view, you are spot on, boiling it down to a Trump / XI standoff and find the situation frightening. Hoping I am wrong, but believe, as you do, the world is likely to suffer.
Yet, something needed / needs to be done, the US was on an unsustainable path. I appreciate your work. Thanks
Agree with that. You can de-personalize the analysis as much as you want but the numbers won’t change! The question for China is how will they handle >10% of their GDP disappearing if exports to the US essentially decline to zero? Europe will try and avoid acting as a dumping ground at all costs. For the US, Trump has bet the farm in driving down the 10 year to <4% and so far at least he’s failing bigly. In the end deals are made more out of desperation than desire, so I expect a truce of sorts at some point which enables both parties to sell as a win.
Look, it is insane for our great nation to allow this man to undertake a trade was on his sole decision. It is the same with nuclear command authority. Congress and the courts must act immediately to make it clear his so-called “emergency authority” is revoked and must be approved by Congress.
Our Burger King in the Gold House has lost his mind due to the onset of Neurosyphilis and cannot be allowed to continue this assault on our nation.
To all those you voted for Trump; “You own this mess. Now make it right.”
I don’t know how it’s going to end. However after listening to how Trump supporters think it’s going to go, I’m 100% sure that’s not going to happen. They are confident in capitulation from the rest of the world. China will say it’s there generation’s turn for the “long march”. If Trump doesn’t get his way quickly he’ll bleed out in the long run unless he doesn’t quickly reverse course or congress takes his “emergency” powers away
China needs to structurally pivot from an investment driven growth model to a consumption driven one.
such pivot is not easy. it requires transferring income and wealth from the corporate and govt sector to the household sector. despite the omnipotence of the party and Xi, resistance to reform still exists.
however, in the presence of a foreign bully, it may become relatively easier to rally national spirit and perseverance, unite all sectors behind a common, and prosperous goal.
policymakers in Beijing should not let this opprty go to waste.
This is most accurate read of the situation on Chinese side. Xi has a lifetime of experience dealing with—and outmaneuvering—narcissists like Trump.
Xi is a dictator with Mao's totalitarian mentality; he is going to bring China down. Personal gain is his first and last objective, like all dictators around the world, and being calculative is just a myth.
Thanks for the perspective. The only issue I take with it is the attribution of dispassionate discipline to the Chinese actions. True that relative to those of the US, China's reaction may appear to be dispassionate, disciplined and rooted in conviction. But China's actions towards other countries a decidedly less dispassionate.