China 's strategy to defeat the US - bankrupt it with Trump's help
As Trump rolls out his tariffs on the world on “liberation day”, China watches with glee. It doesn't happen everyday when one's adversary blows his head off in front of you on his own initiative. Talk about never interrupt your enemy when he is making the mother of all mistakes…
The inevitable result of Trump's tariff war will be a severe disruption to the global supply chain. As a nation who sits at the bottom end of the supply chain with its over consumption and reliance on imports for both consumer and business needs, such a disruption will lead to inflation and an economic recession.
To counter higher inflation and economic downturn, the Fed will have to raise interest rate and the government will increase spending to stimulate the economy. As the US government spending already accounts for a quarter of GDP, higher interest payments and more expenditures will further increase deficit, forcing more debt borrowing and more deficits - a perfect vicious cycle.
It is clear the US is focused on militarily confronting China in Taiwan. China’s military advancement is forcing the US to spend huge amounts of money to get ready for a war:
The recently announced F-47 sixth generation fighter program
Developing hypersonic missile technology to catch with China and Russia
Developing hypersonic defense
Preparing for space warfare such as the orbital carrier concept from Gravitics
Upgrading naval ship building for both surface vessels and submarines
Investing in large scale swarming drones
Military AI and robotics
Upgrading nuclear arsenal
Fortressing Guam for potential Chinese attacks
Building and fortifying military bases in Japan and the Philippines
The for-profit US military industrial complex will pile in to maximize costs. Those include not only the 5 oligarchs monopolizing arms sales today but new entrants peddling overpriced new solutions such as Anduril and SpaceX. Expect to see more no-bids contracts like the Boeing F-47 program.
As China currently spends less than 1.5% GDP on defense vis-a-vis 3.5% for the US and 2% global average, China can easily afford to up the ante and trigger further military spending from the US. Just as the US bankrupted the USSR to win the Cold war, history is repeating itself and China will force the US to spend its way to defeat. Sun Tzu defined the best war strategy is to win without fighting.
Despite his rhetorics, Trump is solving none of the structural issues facing the US - infrastructure, education, lack of manufacturing competitiveness, overburdened finance. With his insane tariffs, he is bifurcating the world into two camps - the high cost and high barrier US-led west and the low cost low barrier China-led global south.
As Trump spends, baby, spends into bankruptcy, China has its best unpaid agent in the white house.
The American blunder goes back decades when they thought militarism would win them the world when economics has won the battle.
They just can't accept that the global majority will ultimately prevail, especially when they only speak for 4% of the world's population.
Trump can never admit that America's industrial base was shipped off to China to take advantage of cheap labor and greater corporate profits, and then the Chinese kicked out the neoliberals and kept their economy sovereign. The "Chinese miracle " is in part testament to America's intransigence.
While the US has squandered trillions of dollars on wars and militarism, other countries have focused on peace, prosperity and progress and now America is eating their dust.
It is staggering and ominous American elites are so blind to the harsh reality they have created for themselves and their peoples.
China should do more to undermine the USD status of global reserve currency. It allows the US to export inflation.