Prediction on US/China Trade war to be verified in 2021

Main points of contention

  • Marxist ideological foundation versus a Judeo-Christian philosophical foundation
    • “In god we trust” versus a centrally controlled and designed market model
    • China’s inability to open up markets internationally due to challenges in finding a sustainable way to separate market from government
    • viewing the Party as above the market leading to difference in way IP ownership is viewed
  • The Chinese dream versus the American dream
    • China’s dumping strategy which lead to the severe imbalance of trade and thus steady US job losses over the past years
    • China’s strategy of acquiring US technology via forceful knowledge transfer due to its point of view on markets which resulted in the blacklisting of Huawei
    • China’s intention to establish leadership over two thirds of the world’s population thus challenging US dominance leading to the election of a hawkish US president

Assessment of situation

  • The issue is deeply structural and resolution will be unlikely during Trump’s current term of service
  • Companies within impacted industries will continue experiencing negative headwinds well beyond 2019
  • US companies will gradually shift production to the US and other parts of the world as President Reagan’s hypothesis on China’s successful transition to a market economy gets invalidated
  • World splits into two distinct economic blocs
  • Chinese economy will face continued pressure given the following concerns
    • aging population
    • lack of room for further domestic growth
    • none granting of WTO market status
  • US untangles its free market economy from the Chinese centrally controlled market economy as the latter slips into recession

Related references

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