Fallacies and lies of American trade deficit with China - Trade deficit with China is good for Americans

Note: With the rogue Evil Empire creating troubles all over the world, threatening invasion of countries and starting trade wars with China and its western allies, there are just so many things to write about how the Evil Empire is destabilising the world and raising tension in the guise of protecting their national interest at the expense of the rest of the world. The scourge of the world must be identified and put on the pedestal for the world to know. The Evil Empire is the Evil Empire. Period.



The Americans are using their trade deficits with China as a tool to give the impression that it if unfair for China to have trade surpluses against the Americans and it is a bad thing, Americans losing and China gaining in trade between the two countries. This is no good and the Americans want the trade to be balance or better the deficit be on the Chinese side, ie, China buys more from the USA and sell less. Just looking at these numbers without looking the bigger it is easy to believe that the Americans have a genuine grievance against the Chinese. If one would to consider the bigger picture and other factors, the trade deficit is actually beneficial to the Americans for if they are not going to buy from China, their overall trade deficit could be even bigger and more unbearable.

Consider this, both countries buy or import based on needs and export based on how much they could sell, the more the merrier. Imports or what they buy have a limit, depending on demands and consumption of their people. For example, if the Americans need x items, they would only buy x items either from China or elsewhere. They would not buy more than x unless they are buying for storage, for the future. This applies to China as well.

So, if the Americans are buying x items from China at $a, the alternative is to buy x items from other sources at $b. The Americans are buying from China because the items are cheaper, value for money. If not they would be buying from other countries, maybe Europe, Australia, Japan etc etc.  The Americans would not be buying from China if they could buy the same items cheaper elsewhere.

Thus, if they refused to buy from China, like what they did now with higher tariffs, they would have to pay more $a + $c. They could cut down their trade deficit with China, but ended up paying a lot more buying from other sources. The net impact is a bigger overall trade deficit for the US. China is actually doing the Americans a big favour by selling them cheaper items. The Americans should be thankful to the Chinese for the trade deficit that actually lower the overall trade deficit of the US with the rest of the world.

This is the first fallacy of trade deficit with China.

The second fallacy is export or selling to China. China can only buy what it needs plus whatever it wants for storage and reserves and nothing more. China is buying all the grains and food it needs from the Americans plus the rest of the world. The Americans cannot expect China to buy all its food and grains from the Americans at higher prices when it could get cheaper from other sources. There is a fixed amount that China needs to buy from the Americans. But China can buy other goods from the Americans to narrow the trade deficit, and what China needs is high tech goods. But the Americans refused to sell and insist that China must buy more grains and food. Is this reasonable, logical, fair? The big trade deficit is self inflicted by the Americans. China is also interested in investing in properties and assets in the US, but the Americans refused to sell. Goods that the Chinese do not need are as good as rubbish, waste. Americans cannot be expecting China to be buying unlimited rubbish and waste from them just to lower the trade deficit.

The buying and selling, or import and export of both countries are governed by the principles of economics, free trade and capitalism. The Americans must stop spreading white lies that they are the victims of unfair trade with  China. They can stop buying from China and buy from other countries. The truth is that they are making billions of savings that they would otherwise have to pay for more expensive goods from other sources.

Trump is claiming victory, he is winning, the Americans are winning in this trade war, China is losing, China is suffering from lower GDP growth. For things that China is not buying from the Americans, Chinese can always find substitutes at lower prices from elsewhere. China can also sell its goods to other countries as its products are cheaper and better than the Americans. There will be temporary loss of trade between the two countries but China would soon find new trading partners and developed new supply chains and networks.

What about the Americans, where else has such a big market for expensive American goods, for American soya beans and food products? Where could the Americans find a 1.4b market of middle class consumers? The truth is that many of the American farmers and businesses are closing down and suicide cases have increased substantially. There is a depressive mood transcending across the American continent, a sense of despair. The tariffs are not only hurting the people in business but every ordinary American that needs to consume goods and services. They all have to pay more, their pockets are hurting. How long can they last when 50% of the Americans are living from one pay check to the next and cannot afford a sudden bill of $500?

Trump can continue to put on a facade of winning, everything is fine when everything is not fine. China's GDP may fall by 0.8% from 6.5%, still giving a growth of 5.7%, numerically. The American GDP will fall by 0.3% from 3% ending with 2.7% growth. Who is the bigger loser? The Americans would feel the pain in less than 6 months, with more suicide death, business closures and bankruptcies.

Trump cannot hold on for long, a lie is a lie and will quickly be exposed. The pain and suffering will be born by the ordinary Americans, the farmers and the blue collar workers. Show hand time is near and it would be game over for the Trump Administration.

Say a big thank you to China for the big trade deficit, for the privilege of buying cheaper goods and services. It could be worse. Without China, all the Americans living from one pay check to another would not be able to make ends meet, unable to buy the little essential and luxury items Made In China. The Chinese did not force the Americans to buy Made In China products. They can buy from other countries and reduce the trade deficit with China immediately.  Why so difficult and need to start a trade war?

Don't buy Chinese products, just like don't allow Huawei to enter American market. China can also don't buy American products, don't buy Apple. What would happen to the poor American middle class when they are unable to buy cheap Chinese goods and did not have enough money to buy expensive European or Japanese goods? China is the saviour of the American middle class.

In the meantime Trump said the America economy is growing, unemployment rate is at the lowest. If this is true, it means more companies are hiring than companies closing down and losing jobs. Time and truth will tell, very soon.

PS. Walmart is going to close its doors soon if it has to buy higher priced goods from China due to tariffs as there are no cheaper and better source of goods other than China. The poor Americans farmers cannot sell as China would not buy. Those that want to buy cheap and value products from China cannot do so because of tariffs and fake protectionism.

China must stop selling rare earth to the US on grounds of security and national interest.