China Has Been Preparing For A Trade War For Over A Decade

Authored by Brandon Smith via Alt-Market.com,

The crash of 2008 brought with it a host of strange economic paradigms rarely if ever seen in history; paradigms which have turned normal fiscal analysis on its head. While some core fundamentals remain the same no matter what occurs, the reporting of this data has been deliberately skewed to hide the truth.

But what is the truth? Well, at bottom, the truth is that most economies around the world are far weaker than the picture governments and central banks have painted. This is especially true for the United States.

That said, one country has been pursuing an opposite strategy for many years now — meaning, it has been hiding its economic preparedness more than its weaknesses. I am of course speaking of China.

When we mention China in the world of alternative analysis, several issues always arise: China’s expanding debt burden, government spending on seemingly useless infrastructure programs like “ghost cities,” China’s central bank and its corporate subset misreporting financial figures regularly, etc. All of these things fuel the notion that when a global fiscal disaster inevitably takes place, it will emanate first from China. They also give the American public the false impression that a trade war against China will be easily won and that China will immediately falter under the weight of its own veiled instabilities.

However, if one actually studies China’s behavior and activities the past decade, they would see a method to the apparent madness.

In fact, some of China’s actions seem to suggest that the nation has been preparing for years for the exact geopolitical conditions we see today. It’s as if someone warned them ahead of time...

In terms of prepping for a trade war with the U.S., China has implemented several important steps. For example, for at least the past 10 years the country has been shifting away from a pure export economy and reducing its reliance on sales of goods to the U.S. In 2018, Chinese consumer purchases of goods are expected to surpass that of American consumers. For the past five years, domestic consumption in China accounted for between 55% to 65% of economic growth, and private consumption was the primary driver of the Chinese economy — NOT exports.

The argument that China is somehow dependent on U.S. markets and consumers in order to keep its economy alive is simply a lie. China is now just as enticing a retail market as the U.S., and its domestic market can pick up some of the slack in the event that U.S. markets are suddenly closed to Chinese exports.

The problem of swiftly growing Chinese debt is presented often as the key argument against the nation surviving a global economic reset or trade war, with its “shadow banking” system threatening to unleash a long hidden credit crisis and stock market plunge. But this is not the complete story.

The exact amount of fiat printing that China’s central bank undertook after the 2008 crash is not known. Some estimates calculate China’s debt to now sit at around 250% of its gross domestic product. By normal standards this would suggest a credit crisis is imminent. But was China’s sudden interest in debt expansion a reactionary matter, or was it part of a bigger plan?

Just after 2008, a common argument against China’s resilience was the notion that China was dependent on holding U.S. dollar reserves in order to keep its own currency weak. Meaning, Chinese companies had to sell goods to the U.S. in exchange for dollars, which they then exchanged to the central bank for Yuan. China’s central bank then held those trillions of dollars in reserve as a means to keep the dollar artificially stronger on the global market, and the Yuan weaker, thus supporting and perpetuating the old export model.

Obviously this argument is no longer applicable, or outright absurd.

China’s own debt expansion and Treasury bond issuance actually started way back in 2005 under the “Panda Bond” program. At the time it was treated like a novelty or a joke by the mainstream economic community. Today, it is a powerhouse as Yuan denominated assets are spreading around the world.

China no longer needs to hold dollars or dollar denominated assets in order to keep its currency weaker for export markets. It can simply inflate and monetize its own debt, just like the U.S. does. But why would China bother to do this at all? Why jump into the same debt game that has caused so much trouble for western nations?

Perhaps because they know something we don’t. During the initial phase of the derivatives crisis, the possibility of China joining the International Monetary Fund’s Special Drawing Rights basket leaped to the forefront. With the Yuan as an SDR basket member, its potential to become a financial center for global trade rather than just an export and import hub would be assured. But the IMF set certain requirements before China could join.  One of these requirements was far greater currency liquidity and a more “freely usable” Yuan market. In other words, for China to join the SDR basket they would first need to go into considerable debt.

This is exactly what they did; not to prop up their banking system (though this made for a valid excuse) or to necessarily prop up their stock markets. Rather, China wanted a seat at the table of the “new world order,” and they bought that seat through massive debt expansion. China was officially included in the SDR basket in 2016.

China has been a very vocal proponent of the SDR basket system, and it becomes clear why if you understand what the globalists intend for the future of the world’s monetary framework. This plan was first outlined in the globalist controlled Economist magazine in 1988 in an article calling for the beginnings of a global currency in 2018. The article states that the U.S. economy and the role of the dollar as world reserve would have to be diminished, and that the IMF’s Special Drawing Rights basket could be used as a bridge to set up a single currency for all the world’s economies.

This currency would of course be administered and controlled by the banking elites at the IMF.

Since 2009, China’s central bank has called for the SDR to become a “super-sovereign reserve currency,” in other words, a global currency system. In 2017, the vice governor of China’s central bank stated that central banks should increase their use of the SDR as a unit of account and that greater SDR liquidity should be encouraged. In 2015, China’s central bank suggested that the SDR system should “go digital,” creating a digital version of the reserve so that it could spread quickly.

It should come as no surprise that the IMF is in full agreement with this plan and has even suggested in recent articles on its website that cryptocurrencies and blockchain technology are the future evolution of the monetary system.

Notorious globalist George Soros revealed a few darker details of what the IMF calls the “global economic reset” in an interview in 2009; these details included a diminished American economy, a diminished dollar and for China to become a new economic engine for the world.

Finally, China has clearly been prepping for a considerable crisis in the dollar or in the world’s economic stability as shown in its sudden and aggressive stockpiling of gold reserves the past decade. Only recently surpassed by Russia in purchases, China is one of the most aggressive national buyers of gold. An expanding gold stockpile would be an effective hedge against a collapsing dollar market. If the dollar loses its world reserve status, nations like China and Russia are placed well to mitigate the damages. Considering the fact that the IMF officially holds around 3,000 tons of gold, the globalists are also well placed for a dollar crash.

It would appear that China has been included at many levels in the plan for the global reset. All of the previously mentioned actions suggest foreknowledge of a dramatic shift in the dollar model. The trade war itself provides perfect cover for the economic reset, as I have been warning in my latest articles. China would play an important role in the reset, as they have the ability to dump U.S. Treasuries and the dollar as world reserve, causing a chain reaction through global markets as their trading partners follow along in a domino chain.

They will likely do this quietly (as Russia recently did), in order to pawn off their T-bond holdings before news of a Treasury dump hits the mainstream. The primary beneficiaries of this act will be the globalists, while China has placed itself to survive (not necessarily to thrive) during the chaos. The same cannot necessarily be said for the U.S., which suffers from the Achilles Heel of total dependency on the dollar’s primacy.

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Comments

philipat Al Gophilia Thu, 07/12/2018 - 23:44 Permalink

Again this article underestimates the Chinese. They don't need to be "warned in advance" because they are very smart and think much longer-term than Western States who focus on just kicking the can as far as the end of the road that they can see or be held accountable for before leaving office?

It's not an accident that Sun Tzu was Chinese?

In reply to by Al Gophilia

CrazyCooter powow Fri, 07/13/2018 - 00:30 Permalink

Disappointed in the comments.

Regards,

Cooter

P.S. What kind of comment system let's me do a Hunter Thompson ... like, way after the fact ...

“Life should not be a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside in a cloud of smoke, thoroughly used up, totally worn out, and loudly proclaiming "Wow! What a Ride!”

If anyone thinks China can cut off the US from SUPPLY, and come out ahead - y'all are fools. Their banks/money/system is pretty fucked up - is it like, dude, this is good shit, china's good, right, yo.

The US can feed itself.

The US can power itself.

Will the US/China break up be *horribly awful* - yes. But, trust - my ex ain't doing so hot these days - so perhaps the long run outcome isn't so easy to figure and might be biased depending on where your garden is rooted.

Despite all that, we (the US) won't starve and we are allowed to shoot the delta bags that get out of control. Just stay the fuck off our lawns, yo.

 

 

In reply to by powow

Shillinlikeavillan giovanni_f Fri, 07/13/2018 - 01:31 Permalink

Ahh yes, the crash of 2008.... I remember it very well, I was in college at the time for electronics engineering and computer science. However, on one of my computer screens was whatever the teacher was blabbering on about, and on the other was foxnews as they were freaking out about -800, -1000 point drops, and on my third computer screen was all the information I could gather about the federal reserve and everything related to our banking system...

 

... needless to say, I dropped out of electronics engineering... something about failure to get passing grades. ^.^

 

However, I learned, and continue to learn about how our country was doomed on that fateful night of 23DEC1913, and have stacked faithfully ever since....

 

GOLD! BITCHEZ! AND AMMO! AND FOOD! 

In reply to by giovanni_f

uhland62 philipat Fri, 07/13/2018 - 00:09 Permalink

It's not rocket science and you don't need to be Chinese to know that every overlord will hit a wall because no overlord has ever known when to stop.

Bush II's military adventures were bad enough and had Obama been able/willing to stop those that existed, maybe things would be better. But he listened to the whisperers who told him he could destroy Libya, Syria, and Yemen, too. And why not throw in Ukraine.

There comes a point when too much destruction destroys the destroyer.  

In reply to by philipat

soyungato uhland62 Fri, 07/13/2018 - 02:32 Permalink

I did not vote for Obama 1st and 2nd term. However, in his defense, what make you think he was in control ? More likely it was the deep state which destroyed Libya and escalated in Afghanistan. Towards the end he working to stop the Syria madness but some generals bombed Syria to de-rail his effort. Obama also defied Israel, signed a treaty with Iran among other deeds. He showed a backbone towards the end.
Trump, whom I voted for, on the other hand, has done more for Israel than any one president. He fucking moved the embassy to Jerusalem against the whole world. He is a fucking Zionist in disguise and will soon set the world on fire attacking Iran economically and may be physically. Fucking asshole..

In reply to by uhland62

ChaoKrungThep philipat Fri, 07/13/2018 - 01:04 Permalink

Exactly. If you have to fight openly, you've already lost. That is, know the opponent's weakness and your own real strength, then let the opponent walk into the trap. The US is "led" by fools and crazies, so China sprinkles the path to quicksand with green-colored paper. The Americans are still picking up paper as they sink. Nice.

In reply to by philipat

NoDebt NoDebt Thu, 07/12/2018 - 23:44 Permalink

"It would appear that China has been included at many levels in the plan for the global reset. All of the previously mentioned actions suggest foreknowledge of a dramatic shift in the dollar model"

Are the Joos aware of this?  You would think you would need the Joos in on this for it to work.  Yeah, they're probably in on it since Joos and Chinks have historically gotten along really well together.

 

In reply to by NoDebt

Implied Violins NoDebt Fri, 07/13/2018 - 00:13 Permalink

1.  Nixon takes the US off of the gold standard

2.  Nixon goes to China; Kissinger cements relations, probably making monetary promises

3.  American industry goes to China, reason given:  to take advantage of cheap labor

4.  American debt grows exponentially; China becomes economic powerhouse

5.  America now a gross debtor nation with probably no gold and even little manufacturing remaining; China now produces everything for America and has been buying gold hand over foot

6.  America starts trade war with China; China now a major part of the SDR while the dollar is being dumped everywhere; America soon to join the ranks of Venezuela

7.  The BIS and IMF overseas each and every one of these steps, which also oversees the FED

 

For all of that to happen major international bankers have to be involved; and only some of them are Jewish...but they are the ones that will be blamed for it all when the hammer falls, while those at the very top get off scot-free - just like they have done each time the world's reserve currency has changed since the 1400's.

 

EDIT:  want some proof?

George Soros, on bringing China into the New World Order:

https://www.youtube.com/watch?v=YlG_zYgG05o&t=9m26s (less than one minute)
https://www.youtube.com/watch?v=GSscAIN8Omo  (ten minutes)

"I think this would be the time, because you really need to bring China into the creation of a new world order — financial world order. They are kind of reluctant members of the IMF. They play along, but they don’t make much of a contribution because it’s not their institution. Their share is not commeasurate — their voting rights are not commeasurate — to their weight. So I think you need a New World Order that China has to be part of the process of creating it, and they have to buy in. They have to own it the same way as I said the United States owns… the Washington consensus… the current order, and I think this would be a more stable one where you would have a coordinated policies..."

In reply to by NoDebt

BeanusCountus MsCreant Fri, 07/13/2018 - 01:02 Permalink

Can’t understand the downvotes to your post, wondering if anyone gets it. Anyway, China is not afraid of this trade war. Neither is Trump. That’s a good thing. The time to do it is now. Let’s just see how an economy whose middle class household income is projected to rise this year to $12,00 can handle it. And the turmoil that an interruption in that progression can create. Art of War: Timing is everything.

In reply to by MsCreant

roddy6667 BeanusCountus Fri, 07/13/2018 - 03:40 Permalink

You seem to think that Chinese family being middle class at $12,000 is a weakness. That is China's strength. Between the low cost of living, the 36% savings rate,  and the low personal debt of the Chinese, they can can withstand a tariff war much longer. Americans need vast amounts of income just to keep above water, to eat and stay out of the rain. Between high debt and high taxes, very little of that "high income" is available after paying the bills. And none of it is saved. The government likes to point out that Americans are saving more, but they never mention that this is offset by the increased debt.

In reply to by BeanusCountus

philipat Dutti Thu, 07/12/2018 - 23:51 Permalink

What can be expected from a washed-up unelected alcoholic in charge of an impressive EU wine cellar? And in his previous gig, he was responsible for signing all the sweetheart tax deals in Luxembourg for thousands of MNC's. Tax deals which, in his new role, he condemns (a/k/a hypocrisy).

In reply to by Dutti

RagnarRedux Thu, 07/12/2018 - 23:34 Permalink

Someone has been helping them prepare for more than just a trade war, starting over 35 years ago.

(1993) New York Times: C.I.A. Chief Says Israel Has Been Selling Advanced Military Technology To China For Over A Decade

https://www.nytimes.com/1993/10/12/world/israel-selling-china-military-…

(2013) U.S. Furious With Israel For Selling Advanced Military Technology To China

https://www.algemeiner.com/2013/12/22/u-s-furious-with-israel-after-sal…

(2007) Israel Flagged As Top Spy Threat To U.S. In New NSA/Snowden Document

http://www.newsweek.com/israel-flagged-top-spy-threat-us-new-snowdennsa…

Sayanim Everywhere

“Israeli spies have done more harm and have damaged the United States more than the intelligence agents of all other countries on earth combined... They are the gravest threat to our national security.”

— Admiral Bobby Inman 
   Former Deputy Director of the CIA

http://www.texemarrs.com/082012/sayanim_everywhere.htm

https://www.veteranstodayarchives.com/2010/07/19/sayanim-israeli-operat…

http://www.whatreallyhappened.com/WRHARTICLES/israeli_spyring_fox.html?…

Forward: 90% Of The Foreigners Helping The Chinese Communist Revolution Were Jews

https://forward.com/schmooze/159051/a-jew-in-maos-china/

https://www.haaretz.com/the-jews-who-fought-with-mao-1.5272071

philipat NoDebt Fri, 07/13/2018 - 02:04 Permalink

This IS ZH after all, so I guess by now the anti-semitism (allegedly against the rules of the site) should be expected. Usually led by our very own resident Biblicism Institute spammer:

powow, MoreSun, cheoll, wadalt, revolla, beepbop, pier, lloll, bobcatz, loebster, ergatz, armada, Mtnrunnr, Anonymous, luky luke, Cjgipper, winged, moimeme, macki mack, tchubby, sincerely_yours, HillaryOdor, winged, lexxus, kavlar, lhomme, letsit, tazs, techies-r-us, stizazz, lock-stock, beauticelli, Mano-A-Mano, mofio, santafe, Aristotle of Greece, Gargoyle, bleu, oops, lance-a-lot, Loftie, toro, Yippee Kiyay, lonnng, Nekoti, SumTing Wong, King Tut, Adullam, PrivetHedge, evoila, rp2016.

And at least 30-50 other suspected logins, slowly being “upgraded” to the list of infamy.

In contrast to the ADL (And other hardline zionist organizations plus several US States") push to get anything anti-Israeli re-classified as "Anti-semitic", I beg to differ as it is perfectly possible and entirely reasonable to be totally opposed to the Israeli genocide and land grab in Palestine without being anti-semitic, unless your name happens to be Nikki Haley. But then, of course, they know that already..

I suppose it makes a change from the MSM where everything is Putin's fault?

In reply to by NoDebt

MsCreant Thu, 07/12/2018 - 23:37 Permalink

Gives the Chinese a lot of credit. It seems to me they don't like negative press and seek to control, for instance, the internet. They are not only letting the bad news out. They don't like criticism. 

Cardinal Fang Thu, 07/12/2018 - 23:37 Permalink

Who is gonna feed a billion mouths?

Oh, that's right, we will make up some arbitrary rules and assign them the death penalty.

Should be able to reduce the population by 10-20% in a year or two.

What? Say it ain't so...

Yippie21 Thu, 07/12/2018 - 23:42 Permalink

Preparing?  We've been giving them everything, ( cough, cough, Clinton and Gore ).  The fix has been " in".  Let's see just what China can do in a trade war when they are holding a LOT of our bonds... their rich are heavily invested in our Stock market and our real estate market, not to mention trade.  Massively one-sided.  China cannot withstand a determined USA that fights back and is willing to shake things up.  A agreement will be reached.  We can all get rich together. 

JibjeResearch Thu, 07/12/2018 - 23:43 Permalink

Yes, China got..

1. The Belt Road Initiative

2. The SCO nations and population

3. Cheap resources from Africa and around the world.

4. Support from ASEAN, Eastern Europe and/or most of Europe, and CELAC.

5. The Yuan/USD ratio of 6/1.

6. Cheap labor

 

Tell me what we have other than the DoD?

roddy6667 JibjeResearch Fri, 07/13/2018 - 03:55 Permalink

While America has military bases in 130+ countries and wars in seven, Xi Jinping has been going to Africa and South America leading delegations and setting up new mutually beneficial agreements. Many of them set up farms and plantations to be run by the Chinese. Others involve mining. Xi practically lives on an airplane. If you read something other than Fox News or CNN you can see this.

The SCO meeting was held in our city of Qingdao about a month ago. The heads of state of 18 countries were there. This is the Belt And Road Initiative. Americans are oblivious to what is happening. China, Russia, and 16 other countries will have a massive economy in a contiguous land area that holds half the people on the planet. Europe can participate if they play nice, and China and Russia get to decide this. 

America is not part of this. In fact, Americans won't even know it exists until the effects are severe.

In reply to by JibjeResearch

Chief Joesph Fri, 07/13/2018 - 00:19 Permalink

"China Has Been Preparing For A Trade War For Over A Decade".  Well,  Of course Brandon Smith!  They are not stupid people.  They know how capitalism works better than most Americans do.  It's the primary reason why we aren't going to win any trade wars with them. They are prepared, and America isn't.

Actually, the Chinese have been preparing for this way before July of 2005, when China revalued the yuan and ended its fixed rate pegged to the dollar. As a matter of fact, before 2005, the U.S. Congress had been threatening to impose stiff trade sanctions on Chinese imports if it did not allow more market-based valuation of the yuan.

During that time, the yuan was estimated at being about 40 percent undervalued because of the trading restrictions. By undervaluing the yuan, it resulted in China having very large trade surpluses, and favored Chinese companies competing with foreign industries.

The move to unpeg the yuan from the dollar by the Chinese reduced the threat of that kind of trade war, which is one of the factors that likely lifted stock futures early in 2005.  So, it can be accurately said: The U.S. congress was actually the driving force behind the Chinese to plan ahead for these trade and currency wars, and they have every intention at beating us at our own game, and have the where-with-all to do it.