Trump started his trade war with China over a year ago. After a year of escalations, two high-profile G20 meetings and months of on-off-on again negotiations, the trade war has the world tittering on the edge of a global recession.
In the run-up to last month’s G20 meeting, Trump had boasted that “it’s me right now that’s holding up” a deal with China. Rejecting Beijing’s pleas for a “balanced” deal, Trump’s top trade advisor Lighthizer declared that any deal must involve China making up for its’ “past transgressions.” 1
The notion that the U.S. has long been the victim of unfair
trade practices, especially at the hand of China, thus is no longer just election rhetoric, but the raison d’être of America’s trade
The EU begins officially to investigate Google for alleged anti-competitive practices. According to this aljazeera report,
European Union regulators are to investigate whether Google has abused its dominant position in the online search market in what will be the first major inquiry into the internet giant’s business practices.
The competition watchdogs formally announced their investigation on Tuesday after complaints by rivals that Google gave their services “unfavourable treatment” in unpaid and sponsored search results.
Authorities will investigate whether Google’s services are being given preferential placement in search engine results, some of which may lead to consumer spending.
One of the complainants, British search site Foundem, said in a that its revenue “pales next to the hundreds of billions of dollars of other companies’ revenues that Google controls indirectly through its search results and sponsored links”.
Intro: China’s accumulation of foreign currency is a hotly debated topic. Secretary of Treasury Geithner recently characterized it as “currency manipulation,” a legal term of art which allows the United States to take retaliatory measures.
I have written a paper that approaches this practice from a different angle, and recommends a different solution. The paper can be downloaded here http://ssrn.com/abstract=1332842
In this paper, I revisit the historic ideas surrounding miserliness and usury. I explain why these were economically pernicious activities, and why they were socially stigmatized or made illegal. The paper then moves onto international relations. I argue that China has been acting as miser and usurer on the world stage, at the expense of its own needs and global productivity. The world needs to balance spending vs. saving/investing/lending, and if there is too much of the latter then a rebalancing is inevitable. China has been doing too much of the latter, and the current economic crisis is that rebalancing.
The preferred solution to this problem is not trade protectionism, but rather increased trade. Over the past decade Americans have spent trillions of dollars on Chinese goods and services. This created employment in China and helped the country achieve its potential. The Chinese have responded by hoarding and lending that money. But a relationship where Americans spend and Chinese save and lend is not viable. Only when China takes the dollars Americans spend to employ Chinese, and uses it to employ Americans, will there be a sustainable relationship that can tap the productive potential of both countries. The United States has taken the first step and spent to establish this relationship. It is now China’s turn to spend, to advance that relationship.
I am interested in comments before the paper is published, so please do not hesitate to write me at the link above with any feedback.
Note: post title and content changed per the author’s request. -admin
The Doha round of WTO talks in Geneva collapsed on Tuesday. It was the US vs. India and China, without being able to resolve their differences in farm products. In my view, it’s a good thing that the talks collapsed because the real benefits of the proposed deal to developing countries were minimal but risks were very high indeed. India pulled the plug, with China assisting.