Trade war tactics, Part 5: Forming alliance to cripple opponent’s economy.

 

Trade war tactics, Part 5: Forming alliance to cripple opponent’s economy.

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No. 156).

A trade war combatant may try to line up other countries to form an alliance to cripple a target country. With cooperation from suitably selected allies a combatant can easily win the economic war.

#trade war, #alliance, #Chinese yuan,

Trade war tactics, Part 5: Forming alliance to cripple opponent’s economy.

1. Forming alliance from suitably selected allies.

Some country may have been drunk on its economic growth, then aimed to become a master of the World. It consequently behaves in an aggressive and provocative way towards its neighbors and competitors like demanding laws and order but with only laws drafted by only itself. The suffering neighbors and competitors may decide to form an alliance to fight against a target country which is the aggressor. They may decide to employ an economic war rather than a military war.

In a trade war, the belligerents close their borders to cut off dependency on opponents and maintain its existing superiority over opponents. All sides in a trade war suffers but the self-sufficient countries with individual self-developed economies only suffer some inconvenient, slight increase in prices and costs of living while the traders may suffers near mortal wounds.

Trade war is just one facet of the inseparable multi-pronged (including military) attack to weaken the target country. The aim of a trade war is to weaken the economy of a target country. The strategy is to attack that economy at its weakest points.

2. Typical weak points of a target country.

For example, if the targeted country has been propelled up by being given free access to technology (fine details of technology need to be and had been painstakingly developed in some countries, they never appear out of the blue sky) from the aggrieved countries, they may decide to cut their supply of technology to the targeted country.

If the economic base of the targeted country is trading, transporting, licensed manufacturing then it is easy for the alliance to bypass the targeted country making it nearly mortally wounded.

3. Current alliances set up for the 2018 trade war.

In the current situation, Chinese economy is based on trading, transporting, licensed manufacturing, while USA, EU and UK had been given China free access to technology, licensed manufacturing and trading. USA, EU and UK now feel that they are aggrieved by the lawlessness of China’s action on many fronts:

– Refusing to recognize the Permanent Court of Arbitration‘s ruling on the case of Philippines versus China [1].

– Making unfair trade practice against Western companies operating in China by imposing red tapes as a form of invisible tariffs.

– Making unjustified requirements for transfer of knowledge from Western companies operating in China.

– Disregarding the claims on patents and copyrights from USA, EU and UK.

So USA, EU, UK are banding together and may invite smaller neighbors of China to join them in an economic war against China.

USA has already imposed steel and aluminum tariff from China while USA and EU will have no tariff against each other [2].

On the other hand, China, North Korea, Russia, Belarus, some former Soviet Republics, Iran, some Silk Road countries may form an economic alliance centered on China.

Russia and former Soviet Republics are not sharing the same ideology as China. Silk route countries may have their own disputes with China and are not too eager to be on China’s side.

3. Early results from the current trade war.

China share markets have fallen some 20% from its peaks

“The Hang Seng China Enterprises Index and Shanghai Composite have both fallen more than 20 percent from January highs, putting them among the worst performing stock indexes worldwide”[4d].

Chinese currency yuan has come down [3-4d].

US share markets are still hanging tough [5],[6]. US’s GDP increased 4% under Trump’s leadership [7].

EU, UK share markets have decreased slightly.

China, Russia sold out their holding of US treasury bonds and are buying gold for their treasuries [8].

4. Conclusions

Economic war is an interesting war without bloodshed and it is hopeful that great powers will stick to it to settle their disputes. It looks like USA is winning this war and China is losing.

References:

[1]. https://en.wikipedia.org/wiki/Philippines_v._China

[2]. https://us-issues.com/2018/07/30/trump-juncker-forge-deal-to-pull-back-from-us-eu-trade-war/

[3]. http://www.abc.net.au/news/2018-07-01/chinese-currency-stockmarket-just-had-one-worst-months-on-record/9920626

[4]. http://www.abc.net.au/news/2018-07-01/chinese-currency-stockmarket-just-had-one-worst-months-on-record/9920626

[4b]. https://www.businessinsider.in/the-chinese-yuan-slides-to-a-13-month-low/articleshow/65121414.cms

[4c]. https://apnews.com/d23c3d29b84341f79dbc6678eaaae7ca

[4d]. https://www.bloomberg.com/news/articles/2018-07-17/china-shares-in-hong-kong-fall-toward-lowest-level-in-a-year

[5]. https://www.usatoday.com/story/money/2018/07/26/stock-market-says-u-s-winning-trade-war/832596002/

[6]. https://seekingalpha.com/article/4185884-sentiment-speaks-trade-wars-really-good-stock-market

[7]. https://nypost.com/2018/07/28/gdp-report-proves-trump-is-turning-the-economy-around/

[8]. https://wolfstreet.com/2018/07/17/russia-dumped-most-all-its-us-treasury-holdings-disappeared-from-list/

[9]. https://www.thebalance.com/u-s-debt-to-china-how-much-does-it-own-3306355

Added after 2018 July 31st:

[10]. https://www.msn.com/en-us/news/other/treasury-department-data-shows-russia-is-offloading-its-us-debt-holdings-at-breakneck-speed/ar-BBLdsLq

[11]. https://johnib.wordpress.com/2018/07/31/chinese-economy-starts-to-feel-tariff-impact/

[12]. https://economicprism.com/all-the-makings-of-a-major-economic-fiasco/#more-6159

[13]. https://johnib.wordpress.com/2018/08/01/west-begins-to-close-door-on-chinese-investment/

[14]. https://finance.yahoo.com/news/china-holding-treasuries-keeps-nuclear-044546767.html

[15]. https://www.sprottmoney.com/Blog/has-the-pboc-taken-control-of-the-gold-market.html

[16]. https://bcnn1wp.wordpress.com/2018/07/29/russia-mysteriously-liquidates-all-of-its-u-s-treasury-holdings/

[17]. https://reclaimourrepublic.wordpress.com/2018/08/03/video-trump-pa-rally-business-owners-tariffs-are-awesome-intel-officials-support-revoking-brennan-clapper-clearances/

[18]. https://www.zerohedge.com/news/2018-08-05/china-now-left-just-three-options-and-they-are-all-equally-bad

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