Why in big letters?Will China bail out Biden?
Prominent Chinese academic's warning that inflation might bankrupt the US government will be read carefully in Washington
By DAVID P. GOLDMANJULY 31, 2021
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“We are also facing inflationary pressures,” Jin said, “but because our production has resumed and the supply of products is sufficient, we can manage inflation pressures better. The United States is not so easy to manage. They need us to provide goods. Otherwise, you won’t be able buy anything with so much money, and eventually money will become gold coupons.”
Professor Jin’s warning on Friday at the “Observer” (guancha.cn) website that US inflation might lead to the bankruptcy of the US government will be read carefully in Washington – especially because Jin claims that China can help America out of its economic problems.
These considerations help explain China’s recent demands that the United States remove tariffs and technology sanctions, and drop extradition proceedings against Huawei’s Chief Financial Officer, Jin said. “The reasons mentioned above have made us very confident now. If you have enough confidence, you can make your request very frankly,” Jin told The Observer.
Renmin University professor Jin Canrong has Washington’s attention. The senior director for China at the US National Security Council, Rush Doshi, cited him two dozen times in a new book entitled &…asiatimes.com
China’s exports to the United States in 2021 stabilized well above the long-term trend line, at an annual rate of about $550 billion. The above chart shows Chinese data for exports to the US (these are more accurate than US data, because many US companies routed Chinese imports through other countries to avoid tariffs).
The data is seasonally adjusted using the standard TRAMO algorithm on the Eviews econometrics platform. Shown on the same graph (right hand scale) is China’s net foreign asset position, which rose by a trillion dollars during the past two years.
American factory capacity can’t begin to meet the demand created by about $5 trillion of consumer stimulus, and American consumers turned to China’s robust supply chain for consumer electronics and just about everything else.
The United States needs Chinese imports, and it also needs China to reinvest its export earnings in American capital markets, as I argued in Asia Times last month (“The Enduring Triumph of Chimerica,” June 15, 2021.
America’s dependence on Chinese imports is stunning. Americans spend about $2 trillion a year on consumer durables and $500 billion on apparel, so their imports from China account for roughly a fifth of total spending on these items.
Biden still keeps tariffs on $300 billion in imports from China. If he thinks the US desperately needs chinese imports he should have dropped it. But he doesn’t.
China certainly is at advantage. Coming out from pandemic while other including Vietnam are in lockdown. It’s a long game though. Once we come out, the US will buy from friends and allies.