The shocking truth about China’s trade surpluses!

China has long been a dominant player in global trade, with a history of massive trade surpluses driven by a desire to rule the world. Kevin Roberts, in his compelling new book Dawn’s Early Light: Taking Back Washington to Save America, sheds light on this phenomenon.

1. **Historical Trade Imbalance:
   • Roberts observes that China’s trade prowess dates back to ancient times, influencing the world economy with its demand for Chinese goods. The imbalance in trade led to China amassing significant wealth for its rulers, regardless of the well-being of its people.
   • Despite the substantial trade surpluses, China’s history unveils a surprising twist. In 1839, Britain’s military intervention exposed the limitations of China’s accumulated wealth. Realizing that trade surpluses weren’t sufficient defense against force, the ruling Qing dynasty faced defeat at the hands of Britain.
2. **Currency Manipulation:
   • In modern times, China’s strategy of trade surpluses seemed unsustainable. Roberts highlights that, in the absence of bullion backing, trade surpluses should have appreciated China’s currency. However, China’s surreptitious devaluation of its currency allowed it to continue gaining the upper hand in trade.
   • Despite China’s apparent success in boosting its GDP per capita, Roberts reveals the hidden costs of currency manipulation. Reduced real incomes, coupled with property bubbles, have tarnished China’s economic growth.
3. **Investment in US:
   • To maintain its export advantage, China resorted to investing heavily in the US economy. By propping up the value of the dollar through acquisitions of US assets, China sought to secure its position in global trade.
   • However, these investments may not yield the desired results for China in the long run. The accumulation of depreciating US government debt and assets poses a risky bet for China’s economic future.

While China’s trade surplus strategy may appear beneficial in the short term, history suggests a different outcome. The parallels drawn by Roberts with China’s past demonstrate that such tactics have led to downfall rather than prosperity. If China continues down this path, its geopolitical ambitions may face similar pitfalls to its predecessors.

In conclusion, understanding the historical context of China’s trade practices can provide valuable insights into its current economic policies. Recognizing the perils of an imbalanced trade strategy is crucial for China’s future trajectory on the global stage. History serves as a cautionary tale, steering China towards sustainable economic practices for long-term growth and stability.