Entering 2021, the clouds of the global epidemic have not yet dissipated, and the lives of the American people are becoming more and more difficult. The sharp increase in shopping demand has become the focus of anxiety for the general public. Large supermarkets such as Costco and Walmart are crowded, and small neighborhood stores are overcrowded. The reason behind the rush to buy daily necessities such as milk, bread, and rolling paper, as well as the rush to buy essential goods such as gasoline, water, electricity, and communications, is "soaring prices."
According to the Federal Reserve's consumer survey, the expectations of the American people for inflation are gradually increasing in proportion to the price of goods**, while the sense of happiness in life is declining. Some economists** believe that inflation in the United States is likely to intensify further in the coming years, even exceeding 20% in the next two or three years.
Looking back at the hyperinflation scene in the United States in the seventies of the last century, it is chilling. Deutsche Bank's research team recently issued a warning that the Fed's aggressive release of water in order to fully recover the economy, while ignoring the risk of inflation, could have dire consequences: "If this black swan event erupts, it could trigger a global financial crisis and plunge the global economy into a deep recession." ”
However, in the face of such a severe crisis, why does the United States continue to print a large amount of money?To answer this question, we must go back to the Sino-US war three years ago.
In 2018, the then United States launched a war against China, claiming that it was to protect the United States and safeguard intellectual property rights. However, the fundamental reason behind the war is actually similar to the Opium War in the nineteenth century, stemming from the excessive deficit with China. At that time, the United States believed that its position, as the world's largest economy, was threatened by the rapid development of China, so it tried to contain China's rise through a war of **.
On August 23, 2018, the United States** announced that it would impose punitive tariffs on up to $50 billion worth of Chinese goods. This huge ** "fine" is unprecedented, marking the official start of Trump's ** war against China!
Trump envisages increasing employment and promoting economic consumption in the United States by raising tariffs on China, setting import quotas, and investing in U.S. infrastructure on a large scale.
However, in the past three years, the measures adopted by the United States have not only failed to achieve results, but have backfired, and have had a negative impact on the US economy.
Data shows that since July 2018, that is, after the outbreak of the Sino-US war, China's average monthly surplus with the United States has been as high as 27 billion US dollars, compared with only 21 billion US dollars five years ago. In 2020, China's full-year ** surplus with the United States increased by 27% compared to 2019!This is because the U.S. tariff policy on China has led to U.S. retailers being able to buy Chinese products at a higher price, and then sell them to consumers at a higher price. The soaring ** is unbearable for the American people.
At the same time, the magnitude of the US deficit with China is still widening. Subsequently, the United States frantically inspected a number of Chinese companies and institutions, included them in the so-called "entity list", suppressed Chinese concept stocks, suspended or restricted the entry of some researchers, international students, and visiting scholars, and even threatened to cancel China's holdings of U.S. Treasury bonds and freeze Chinese assets in the United States. It can be said that the United States has substantially pushed for decoupling from China.
However, the outbreak of the pandemic has given the world a clearer picture of the speed of China's response to the public health emergency and the solidarity and stability at home, which has strengthened confidence in investing in China. On the contrary, high taxes and high labor costs in the United States have made American investors in China reluctant to return to China, breaking Trump's assumption of pulling the industrial chain back to China.
At the same time, the deterioration of relations between China and the United States has led to a reduction in the number of people traveling between the two sides, which has had a serious impact on the U.S. service and aviation industries.
In addition, the United States' Brexit from China has directly affected various industries in the United States, resulting in the loss of a large number of jobs, consumption power, and a bleak market outlook, which in turn has triggered a series of financial turmoil such as the sharp decline and capital outflow. In response to these short-term situations, the United States is forced to constantly print money on a large scale to stimulate economic recovery, which leads to inflation.
Inflation not only affects consumer goods in general, but also makes commodities rise. The United States has used the hegemony of the dollar to transfer the crisis to other countries, while China has been passively suffering from imported inflation in order to avoid the impact of the rising exchange rate of the renminbi against the dollar on exports.
However, the recent rise in commodity purchases by domestic companies and the gradual increase in production costs have led to excess liquidity and a large inflow of US dollars into the Chinese market, which may trigger inflation. If there is a large-scale flight of American capital, it will cause serious damage to the Chinese economy.
Therefore, China liberalized the exchange rate of the renminbi against the US dollar in due course, and the renminbi appreciated. This approach can help enterprises offset the cost of purchasing bulk commodities due to the appreciation of the renminbi, keep prices in a safe range, and even reduce the selling price of domestic products, so as to enhance China's purchasing power and manufacturing brand competitiveness.
Since the second half of 2020, the real economy has declined sharply due to the spread of the epidemic, the service industry has stagnated, and a large number of employees have lost their jobs. Years of advanced consumption have made the savings rate of the American people extremely low, and the purchasing power has further declined. The unsalable goods have caused the domestic manufacturing industry in the United States to suffer heavy losses and even bankruptcy.
Although the United States has punched China one by one, it has always been injured. In contrast, China continues to break through its predicament and take new steps. In response to Trump's tariff measures, China did not launch retaliatory attacks on various industries in the United States, but targeted American energy carriers and agricultural products, trying to arouse the American people's reflection on the war.
In areas such as agriculture, China has many other import channels, and there are many countries eager to enter the Chinese market. The U.S. sanctions on China have not had much impact on China, but have prompted China to open up the markets of other countries and explore win-win cooperation among other countries.
All this highlights the fact that the U.S. war strategy has not had the desired effect, but has led to domestic economic turmoil, while China has emerged in the face of adversity and opened up new market prospects.
The scenario described above reveals a range of economic challenges facing the United States and the impact of the U.S.-China war. These challenges include inflation issues, rising deficits, economic turmoil, and more. Over the past few years, the United States has tried to change the status quo of the domestic economy through policies, but these measures have not been successful, but have exacerbated the problem.
First of all, the issue of inflation mentioned in the article is a serious challenge facing the United States today. As prices skyrocket, the cost of living in the United States continues to rise, and consumers are facing pressure to reduce their purchasing power. Inflation has a negative impact on the economy and society, so effective measures are needed to curb inflation and maintain domestic price stability.
Second, the Sino-US war has had a negative impact on the U.S. economy. The deepening of the deficit has made American consumers face more high-quality imported goods, resulting in an increased burden on consumers. At the same time, the war failed to achieve the desired effect of the United States, but only exacerbated the difficulties of the American economy. War is not a long-term solution, and the two sides need to seek cooperative solutions, rather than mutual sanctions, in order to promote the stable development of the bilateral and economic sectors.
In addition, the article mentions that the U.S. move to decouple from China has led to adverse economic impacts. Decoupling and sanctions between companies have exacerbated tensions between the two countries, taking a toll on domestic U.S. industries and economies. Far from solving the problem, the move has exacerbated the U.S. economy's woes.
To sum up, the current economic challenges facing the United States need to be solved by taking proactive and effective measures. Only through a cooperative, stable and open international environment can we help the United States get out of its current economic predicament and achieve sustainable economic growth and development.
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