China Has Been Preparing For A Trade War For Over A Decade

Thursday, July 12, 2018
By Paul Martin

Brandon Smith
Alt-Market.com
Thursday, 12 July 2018

The crash of 2008 brought with it a host of strange economic paradigms rarely if ever seen in history; paradigms which have turned normal fiscal analysis on its head. While some core fundamentals remain the same no matter what occurs, the reporting of this data has been deliberately skewed to hide the truth. But what is the truth? Well, at bottom, the truth is that most economies around the world are far weaker than the picture governments and central banks have painted. This is especially true for the United States.

That said, one country has been pursuing an opposite strategy for many years now — meaning, it has been hiding its economic preparedness more than its weaknesses. I am of course speaking of China.

When we mention China in the world of alternative analysis, several issues always arise: China’s expanding debt burden, government spending on seemingly useless infrastructure programs like “ghost cities,” China’s central bank and its corporate subset misreporting financial figures regularly, etc. All of these things fuel the notion that when a global fiscal disaster inevitably takes place, it will emanate first from China. They also give the American public the false impression that a trade war against China will be easily won and that China will immediately falter under the weight of its own veiled instabilities.

However, if one actually studies China’s behavior and activities the past decade, they would see a method to the apparent madness. In fact, some of China’s actions seem to suggest that the nation has been preparing for years for the exact geopolitical conditions we see today. It’s as if someone warned them ahead of time…

In terms of prepping for a trade war with the U.S., China has implemented several important steps. For example, for at least the past 10 years the country has been shifting away from a pure export economy and reducing its reliance on sales of goods to the U.S. In 2018, Chinese consumer purchases of goods are expected to surpass that of American consumers. For the past five years, domestic consumption in China accounted for between 55% to 65% of economic growth, and private consumption was the primary driver of the Chinese economy — NOT exports.

The argument that China is somehow dependent on U.S. markets and consumers in order to keep its economy alive is simply a lie. China is now just as enticing a retail market as the U.S., and its domestic market can pick up some of the slack in the event that U.S. markets are suddenly closed to Chinese exports.

The problem of swiftly growing Chinese debt is presented often as the key argument against the nation surviving a global economic reset or trade war, with its “shadow banking” system threatening to unleash a long hidden credit crisis and stock market plunge. But this is not the complete story.

The exact amount of fiat printing that China’s central bank undertook after the 2008 crash is not known. Some estimates calculate China’s debt to now sit at around 250% of its gross domestic product. By normal standards this would suggest a credit crisis is imminent. But was China’s sudden interest in debt expansion a reactionary matter, or was it part of a bigger plan?

The Rest…HERE

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