Trump Knows a Slumping China Needs US More Than We Need Them

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As people get wobbly over the so-called “trade war” between the United States and China, President Trump has steadily maintained, given our rapidly growing economy, that we are in a “strong position”.  U.S. unemployment numbers are way down, while wages, optimism, and consumer spending are all up.

And while we’ve taken a recent hit to the stock market, China’s been in and out of Bear territory for about a year.  That’s even with their government encouraging any company whose stock price has fallen below its book value per share, to buy back shares.  

Simple, common sense math is also on our side.  We are slapping tariffs on $200 million in Chinese goods, while they’re “retaliating” by taxing us on $60 million worth of products.  That’s less than one-third of what we’re collecting, and they’ve got three times as many people (about 1 billion to our roughly 320 million) to keep fed, and productive.  For an authoritarian regime, that’s walking an economic/social tightrope.  

Plus, we’ve learned China’s auto sales fell, from one year earlier, 17.7% in April.  It continues a lengthy slump in that critical industry.  Total vehicle sales, including trucks and buses, dropped 14.6%.  Last year’s purchases suffered their first decline (4.1%) in almost 30 years.

Yesterday, AP reported, “Jittery consumers are less willing to make big purchases amid a tariff war with Washington and unease about China’s economic outlook. Growth in the second-largest global economy held steady in the latest quarter but that was supported by government stimulus spending and higher bank lending.”  Sounding a bit like a bubble?

Today the AP appears prophetic, as CX Live writes, “Growth in China’s retail sales has slumped to its lowest level since May 2003.”  The spending, which includes monies spent by the government, businesses, and households was down year to year, 1.5%.  Also significantly lower, year to year (-3.1%), was production at factories, mines, and utilities.   

It’s also important to note that these statistics are being provided by a country notorious for dramatically inflating their economic numbers.  So how bad could it be over there, and how much is a slumping China willing to bet they can right their economic ship while in a trade war with an increasingly prosperous United States?

Trump knows that country needs us more than we need them, and he’s figuring, sooner or later, they’ll know it too. 


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