How will the economic war between the US and China end?

Q: How will the economic war between the US and China end?

A:

The economic war between the US and China will end US hegemony and bring about a multipolar world order based on mutual respect and win-win cooperation.

First, we should understand the geopolitical objectives of the two countries.

For Trump, the objective is to maintain the US hegemony, the America First, the so-called Make America Great Again.

For Xi, the objective is to protect China's development rights. The Chinese have the right to life, freedom, and the pursuit of happiness. Xi’s vision is common prosperity, a shared future for mankind.

Trump’s objective is the capitalist one: profit at the expense of other nations.

Xi’s objective is the socialist one: a better life for the people of China and the people of the world.

Second, we should understand the economics.

The foundation of an economic system is the creation and distribution of wealth.

The US hegemony is a financial monopoly. With its financial and military power, the US is focusing on making and enforcing rules so that US can take the lion's share of the wealth in the unipolar world order.

Socialism with Chinese characteristics is deploying the socialist principle, where everyone works and gets a piece of the cake according to their contribution to the creation of wealth.

In short, China is mainly creating wealth in the present world economy, and the US is mainly distributing the wealth. This is the design of the world order after World War Two. The global south toils to create wealth, and the global north enjoys the wealth. With globalization, the system is running around the axis of Made-in-China-Consumed-by-the-US. That’s why China is the center of manufacturing while the US is the center of finance.

The trade war between the US and China is a reset of the world order and is destroying the pattern of the world economy. China is not only going to manufacturer, but also going to consume. The US is not only going to consume, but also going to manufacture. Both Trump and Xi are doing so in this direction. China is increasing its consumption, and the US is increasing its manufacturing.

The end result is that China will have more control over the distribution of the wealth it created, and the US will lose its monopoly power over the wealth distribution.

The tariffs decouple the two centers: the center of creating wealth and the center of distributing wealth. It turns up that Wall Street has no wealth to distribute. Once the US’s hands are off how to distribute the wealth China created, China has to have one way or another to distribute the wealth it created. Because China is the largest manufacturer in the world, creating a huge chunk of the wealth in the world economy, the distribution of the wealth will make China dominate the new world order.

It is Trump who initiated the trade war. It is Trump who de-globalizes the world economy. It is Trump who sabotages the present world order. China has no choice but to create a new world order. It is not Trump’s say how the new order to be. Because the US has no wealth to distribute that it has no dominating power in the new world order.

The process is difficult for the US, and the US society will undergo turmoil. The age when Wall Street can have easy money by financing the world economy will be gone. The trickle-down economy of the US loses its source of easy money. The US has to return to the economy of working to create wealth for itself. The dollar will eventually exit the world economy as a hard currency.