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February 26, 2019 | Deal or No Deal, the US and China Economic Struggle Will Continue

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

As markets jolt about on talk of US-China trade concessions, the broader imbalances and conflicts between the two nations will not be easily resolved.

China’s slowing economy and President Trump facing re-election in 2020 seem to point toward the two largest economies making a modest compromise on trade. But the trade deal itself is just a part of the larger geopolitical tug of war between the United States and China’s Xi Jinping.  Here is a direct video link.

Trade deal or no deal, the U.S. and China are still fighting for global power from CNBC.

Late in this economic cycle, both countries now face slowing growth while heavily indebted with aging domestic populations.  Economist and Asia expert Stephen Roach, argues that China’s domestic savings rate being twice that of the US gives it more ability to drive its economy with capital investment, whereas countries like the US have largely hit their limits on fiscal and monetary stimulus options.  See Misreading China’s strength.

I agree that two decades of under-saving, over-spending on debt and funnelling capital into destructive financial speculation have weakened the US and many other economies.  But China has asset bubbles too and having floated the US trillions in vendor-financing for non-productive consumption over the last 20 years, both countries are co-dependent in the financial imbalances and repayment risks now at hand.

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February 26th, 2019

Posted In: Juggling Dynamite

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