Macroscope | Is Donald Trump’s short-term game plan enough to spoil China’s long-term economic, geopolitical strategy?
- China’s 2008 stimulus was modest compared to the US$3.5 trillion by the US, or Europe’s US$2.9 trillion, or even Britain’s US$550 billion
The economic relations between the United States and China are in a state of war on multiple fronts: trade, technology and over the broader economy.
Next up could be a fiscal war over monetary policies, as the two powers react to the economic fallout from their conflicts. If so, the size of China’s fiscal purse could give the country an advantage.
Economies in Europe and elsewhere that are getting trampled by the battle of the two are in no better position to match China’s ability to use its fiscal policy as a weapon.They too could be losers in the long-term game China seems to be playing.
This of course is not the way things are being seen in Washington, or at least in Donald Trump’s camp. The US economy is in “far better shape to weather this [trade stand-off] than the Chinese are,” Trump’s Director of the National Economic Council Larry Kudlow said.
Maybe, but the Organisation of Economic Cooperation and Development (OECD) in Paris sees both the Chinese and US economies slowing at roughly the same rate over the coming two years as global conditions deteriorate, and as the growth rate of the world economy slows from a projected 3.7 per cent this year to 3.5 per cent in 2019 and 2020.
Still, Kudlow asserted that “most observers believe China to be in a slump, whereas the US is in a very strong position.”