Weaker Dollar, Stronger Yuan May Hurt The United States And Help China In The Long Run!

I’m no expert in economic matters, but I just want to use my own personal logic to make sense of a few things that are currently happening.  People are seeing that the Dollar is weakening as we speak, and the Yuan is growing stronger as we speak.  Some people say weaker Dollar is a good thing because export will become more profitable.  Furthermore, when export becomes profitable, it also drives up the manufacturing sector at home.  That’s the theory for some people, but I feel that it’s way more complicated than this.

Since the United States isn’t a world manufacture hub — China is holding this title — the United States’ exports won’t matter as much unless the United States becomes the world manufacture hub.  Sure, with weaker Dollar, the United States’ exports will become more competitive than before.  The question is, will a little gain in competitiveness in exports spur the manufacturing sector at home?  Meanwhile, weaker Dollar will make the United States’ imports a lot more expensive.

I think the United States currently imports a lot more than exports.  The United States’ import is at $2.25 trillion and the export is at $1.45 trillion for the year of 2016, according to Wikipedia.  If the United States’ exports continue to slack even with the weak Dollar and the imports continue to grow, the United States could face an even stronger trade deficit.  For an example, manufacturer companies in the United States may have to import more expensive materials from the outside to manufacture products at home for selling across the world and at home.  This may not make the products at home cheaper for homegrown consumers.  Furthermore, this will increase the trade deficit in manufacturing sector if not enough products within the United States get to export to balance out the import costs.

Weak Dollar will increase less buying power for the Americans who go abroad for vacation, business, and so forth.  Weak Dollar can make purchases of products from foreign companies through online websites or offline imports more expensive for the American consumers.  For an example, I could be buying a music plugin from an online website which belongs to a French company, and with a weak Dollar, I could be paying more for this software.

I guess good things and bad things do exist even when the Dollar is weak or strong.  Nonetheless, the most interesting question is can the United States fare better when the Dollar is weaker or stronger.  In my opinion, weaker Dollar can help spur export a bit, but if the United States’ exports don’t carry the whole United States’ overall, long-term economy, then the weaker Dollar will be a very bad thing!

What about China?  If the United States enters a trade war against China, China can increase import tariff costs for the products from the United States.  This could hurt the United States’ export market because weaker Dollar would be neutralized by this move from China.  Furthermore, China can also buy up weak Dollar on the cheap to make Yuan stronger if this would serve China’s agenda.  Of course, stronger Yuan for China could make China’s exports look expensive.  Still, from what I’ve heard, China is trying to spur demands at home to create a bigger home consumer market so China won’t be relying on too much from the export market.  If this is the case, then cheap Dollar would be beneficial for China in a big way!

Stronger Yuan would allow Chinese who are going abroad to get more bang for the buck.  Meanwhile, Chinese imports would become cheaper, and so China won’t have to spend so much money to import stuff.  As China’s export market isn’t doing so bad and the imports get cheaper, stronger Yuan allows China to continue to reform her consumption market.  Foreign companies would love to enter China’s bigger homegrown consumption market because China has 1.4 billion headcounts and growing.  As China becomes an ever more important factor for foreign companies due to the size of Chinese population and market, China can begin to dictate tastes, styles, fashions, and so forth worldwide.  Chinese culture will become ever more influential if Chinese market becomes the most important market in the world.

With a weaker Dollar and stronger Yuan, entering a trade war against China might be very bad for the United States!  China can sanction the United States’ companies, entities, and so much more to crash the United States economy.  Of course, a trade war would be bad for China too, because the United States’ imports from China do matter to China a lot.  Nonetheless, as China doesn’t rely on the export market so much, a trade war between the United States and China won’t deter Chinese economic reform plan.  After all, China wants to grow the homegrown consumption market!  While growing a homegrown consumption market to rely less on the export market, China relies on the cheaper import market to balance out the reduction of Chinese exports.  Weaker Dollar and stronger Yuan will allow China to transit from the export market to a service market, also to move to a higher value-added export market — all in all – making this transition in a smoother fashion.

In conclusion, I think China can make the best out of either weaker or stronger Dollar, and the United States — as long as the country stays less competitive — won’t be able to have the upper hand if a trade war occurs between China and the United States.  Meanwhile, China can use stronger Yuan to buy cheap debts from United States’ weak Dollar to prop up China Yuan’s strength.  This, in turn, will actually help China transits from a manufacturing to a service economy.  As the low value-added market goes away in China, China has to accelerate the reform of the manufacturing sector at home so Chinese future export market will be more about high value-added products.  Anyhow, if the United States isn’t going to be able to use the opportunity of a weaker Dollar to reform her economy somehow to make the United States’ economy more competitive against rivals such as China, in the long run other rivals will use the weaker Dollar as the opportunity to make their own economies a lot stronger.

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China’s President, Xi Jinping, Is Telling The World Why His BRI Could Make The World A Better Place!

In our time, there are small wars break out around the world.  Although these wars seem insignificant, but you never know enough of them will eventually turn into an avalanche of World War III.  People of WWI could not have known how much worse a war could be, but WWII proved them wrong.  I think the people who experienced both WWI and WWII would definitely agree that WWII was way worse than WWI.  Both WWI and WWII encouraged humankind to go on killing each other in deranged way, but these last two insane wars got nothing on WWIII if indeed there will be one.  After all, the next war could encourage modern nuclear weapons to be unleashed on multiple bustling places of this earthly world.  I imagine modern nuclear weapons are way way more powerful than the ones that got dropped on Japan in WWII.  According to PopularMechanics.com’s article “Today’s Nukes Are Thousands of Times More Powerful Than WWII A-Bombs,” a modern nuclear bomb is like 3000 more times powerful than the atomic bomb that got dropped onto Hiroshima, Japan in WWII.  If I’m not wrong, such weapons could end humanity, because hundreds of millions, if not billions, of people will die in such a nightmare.

Unlike our historical pasts where an ocean could be a big barrier for people to get to know each other, today our world is very much connected.  From the oceans to the sky and beyond, nothing can actually be a big barrier anymore.  Our technological advances have allowed humans to communicate in seconds across vast earthly distances.  Even the space in the heaven (i.e., outer space) cannot stop us from sending robots to uncharted domains such as Mars, and we communicate with our robots from such a distance just fine.  So, there isn’t anything stopping us from trying to understand each other even though different parts of earth were civilized in different ways.  Countries from West and East, North and South, and even neighboring countries do have their own historical memories and pasts, because each country was grown and civilized in different way.  Thus, instead of dividing us and them, sowing more hatreds to sow more seeds of murderous, deranged human-made catastrophes such as WWI and WWII, we should think about how much more cooperations today humans should make so humankind can move forward without worrying about earth-kind extinction through the usage of nuclear weapons.

The 14th and 15th of this month, China is opening up a Belt and Road initiative forum, and many countries’ heads of state and delegates are going to descend upon Beijing for this meeting.  No doubts, some countries are still having doubts about China’s BRI objectives.  Furthermore, some countries even doubt that BRI could be achieved since there are so many unknown moving pieces within the agenda.  For an example, along the countries that are the path for BRI, there are terrorism activities that may hamper BRI projects.  Such doubts are logical, but other doubts are more of psychology.  For an example, U.S. may not trust China’s global ambition, because U.S. could view China’s BRI as a way to undermine U.S. global influences.  Nonetheless, China BRI is moving forward as we speak.  Some BRI projects are already either finished or in the work across the world, and many more are in the planning stages.  As BRI forum takes shape, I haven’t heard of anything in relation to U.S. meeting up with China in this forum.  It seems either China isn’t inviting or U.S. is isolating herself from this forum on purpose.  With or without U.S., delegates and heads of state of various countries are descending upon Beijing for BRI forum meeting.

Nobody would know China’s true global ambition, but China seems to be very happy in forming relationships with countries all over the world to promote globalization and world connectivity.  These cooperations among countries in the world leading by China’s BRI would promote higher trade volumes and people to people connections.  Will there be good outcomes from BRI?  I guess time will tell, but China is leading the way to more globalization.  In ancient time, when China was prosperous, ancient Silk Road was one of the ways that kept ancient China prosperous.  Today, as China is getting stronger in economic and military terms, China is striving to revive the idea of ancient Silk Road but with modern utilities to create modern Silk Road so China can keep on being prosperous.  It’s obvious, just like any other country, China is China’s first, because she has 1.4 billion plus of people to worry about.  Nonetheless, cooperation is still better than dividing in hatreds.

China’s president, Xi Jinping, has got a short film in which he narrates and promotes the idea of BRI.  In the short film he tells the world why he proposed and is backing the BRI.

If China is indeed imagining, hoping, and willing to promote and work toward a world where global community would be evermore prosperous and peaceful, I think it’s admirable and noble.  In fact, I think U.S. should have joined BRI in a big way.  After all, U.S. could also bring her huge expertise and wisdom to BRI and ensure the initiative to be even more successful.  With China and U.S. leading BRI, I don’t see how the world would see this initiative failing.  I think a successful BRI could bring the world into a more prosperous time.  Of course, I don’t have a crystal ball, and so anything into the future is very uncertain.  As of now though, my instinct says that BRI is going to gain evermore supports and attractions from countries that want to improve their infrastructures, businesses, and cultural connections.  Here is a million dollar question, can BRI help turns back the minute arm of the Doomsday Clock?  Here is another, can BRI help the world to be even more prosperous through strong infrastructure projects and business connections?  Of course, there are tons of questions in regarding to how BRI would change the world, but I guess we have to wait and see how everything would turn out in the near future for projects and parts of the world that subscribe to China’s BRI.

We Should Heed Chinese Minister of Foreign Affair’s, Wang Yi, Call For Diplomacy In Regarding To Tension Between the United States and North Korea

A rumor has that China has moved around 150,000 troops to the border of North Korea.  Meanwhile, a Chinese minister of foreign affair, Wang Yi, has warned both the United Sates and North Korea to not start a war on Korean Peninsula, and he also said all sides will lose if this to occur.  Wang Yi is one of those top 7, if I’m not wrong, people who are directly taking orders right underneath Chinese president Xi Jin ping.  His words are to be taken seriously, and so it’s going to be foolish to believe that China isn’t going to protect North Korea from an attack.  Lately, online and offline news have surmised that China would help the United States to take out North Korea, but I think these news are too optimistic.  I believe that China would use North Korea as a proxy war to drag the United States in once the North Korea war gets going.

United States’ arm forces are spreading thin throughout the world.  Russia is tempting to expand further West while China is going to expand further in South and East China Seas.  A war with North Korea will be expensive for the United States, because it won’t be a quick war unless the United States uses nuclear weapons.  Nonetheless, once a nuclear missile from the West flies toward the East, Russia and China would quick to release theirs toward the West, because they won’t trust the United States’ true targets.  This means a nuclear war could happen if a nuke starts to fly off in any direction.  Invading North Korea through ground forces requires the United States to persuade ally countries to go along, and the war will be very expensive.  Furthermore, if not careful, North Korea war this time could be a repeat of Viet Nam war in which the North would eventually swallow the South.

The United States still has Afghanistan, Syria, and several other places to be worried about, and so adding North Korea to the plate in a time in which the United States is still trying to fix her economy is rather worrisome.  Although China isn’t favoring the North Korea position in regarding North Korea’s nuclear development, but China hates to see the South swallows the North even more.  This means China would aid North Korea once again once the war starts.  In the long run, I think China is going to use the United States to push North Korea to abandon nuclear development and nuclear weapons altogether in exchange for China’s protection.  If I’m not wrong, I think China’s position is very clear, because China is strategically regarding North Korea as a buffer between the United States and South Korea.  If I’m not wrong, a war with North Korea in our time will pull China into a war against the United States like it had happened in the 1950s (Korean War).

South Korea should be very worried, because once missiles start flying, North Korea will pour down South and try to repeat the Korean War.  Basically, North Korea is a very poor country, and so it got nothing to lose.  South Korea is a very rich country, and so it got everything to protect.  This time with modern weapons, things can be so much worse.  Chinese minister of foreign affair, Wang Yi, in the video right after the break warns both the United States and North Korea in not starting a war on Korean Peninsula.

Why The United States Fears Russia More Than China?

As president-elect Donald Trump may prepare to make peace with Russia, other forces within the United States are clearly against this adventure.  Since president-elect Trump has yet to take office, and so us normal folks would not know what will be the concrete relationship between United States and Russia.  If Russia will not truly warm up to the idea of making lasting peace with the United States, we may see a more confrontational approach between these two powerful countries.

I think many powerful people in the United States fear that Russia may become too powerful again to the point in which Russia can once again expand into areas that were once Soviet Union’s territories.  If Russia decides to do such a thing in the near future, a real conflict between NATO and Russia could very well play out in real time.  NATO is being watchful of Russia, and so NATO’s troops are not too far from Russia’s border.

United States is also worrying about China’s military expansion.  Basically, the expansions of Russia and China at the same time could mean big trouble for the United States.  If NATO gets weaken, Russia would expand and allow China to be more aggressive in South and East China Seas.

Since Russia can never rely on the United States’ friendship, Russia tends to move closer to China for obvious benefits such as economic and military ties.  Furthermore, Russia would not want to make China angry as China is right across Russia border.  I don’t think Putin wants to see China’s soldiers in millions pouring across the China/Russia’s border.  China and Russia are both nuclear armed countries, and so the notion of allowing the conflict to get to the point of confrontation is definitely not very wise.

Meanwhile, president-elect Donald Trump may want to make nice with Russia in hoping that Russia could play nicer in the near future.  This way NATO won’t have to be so active, and president-elect Donald Trump could have more freedom to deal with China alone.  Nonetheless, Europe would be very worried since Russia’s president Putin could be very unpredictable.  Nobody would know if Russia would never do another Georgia invasion into a NATO’s member country.  If president-elect Donald Trump isn’t careful enough, NATO’s member countries could take matter into their own hands and create the situation much worse.

If Russia is going to have a real conflict with NATO, the United States must come to the defense of NATO’s member countries.  This means the United States could not play nice with Russia.  Meanwhile, China is looking to push the United States out of the China Seas.  Furthermore, Russia is not feeling easy as NATO’s forces are too close to Russia’s border.  Basically, the United States if not treads carefully could face two fronts stemming from Russia and China.  If this to happen, the United States will have a tougher time to plan and carry out defensive measures against such confrontations.

Check out the fictional event in the video right after the break where Russia and NATO could face off in a real confrontation scenario.  Although the video is fiction, I have to warn you that it’s very realistic.  Watching this video may give you a sense of what might happen if Russia and NATO begin to fight each other.

Can Offshore Balancing Be More Realistic For The United States’ Foreign Relations?

Although the United States’ old grand strategy was almost forgotten since the fallen of the Soviet Union, but after so many unfinished businesses around the world such as in Afghanistan and elsewhere the United States may have to revisit an old grand strategy which is known as offshore balancing.  According to Stephen Walt in the video right after the break, he suggests that the United States would be better off in foreign relations in applying offshore balancing for foreign relation building.  Offshore balancing may save the United States from overspending in foreign policy matters, but offshore balancing isn’t discouraging in building healthy relations with foreign powers.  Perhaps, if offshore balancing is done right, the United States may have even more friends than enemies while building a stronger nation at home.  Anyhow, I guess no known strategy is invulnerable to everything, and so offshore balancing may not always be best for certain situations.  In my opinion, Stephen Walt does sound very convincing in his argument that the offshore balancing may help the United States navigates the evermore dangerous globe in a more efficient and healthier manner.

G20 In China: Performances For The Leaders

World leaders of most powerful 20 countries are in China for G20.  China isn’t playing around when it hosts the G20 for the first time.  Thus, in Hangzhou, China displays awesome performances to welcome the leaders of the countries that are attending the G20.  Check out the performances in the video right after the break.