Of course - China would say it didn’t care that there was an embargo on Chinese goods by it’s #1 customer but a 1trn surplus country with manufacturing share of GDP key to investment and consumption & indirect sector like services would care.
Why? Factories shut first (impact on China), shortages/empty shelves later (impact on the US & due to front loading much later & most goods are discretionary), & so the pain that China feels from trade war is real while the US is expectations of pain via financial assets movement, which may or may not come.
Why? Factories shut first (impact on China), shortages/empty shelves later (impact on the US & due to front loading much later & most goods are discretionary), & so the pain that China feels from trade war is real while the US is expectations of pain via financial assets movement, which may or may not come.
And the reality is who blinked/caved first doesn’t matter. But anyone who laughed at this & said China can just hunker down & accept massive unemployment of 5 to 8millions is not realizing the importance of jobs, especially manufacturing job.
It anchors the entire economy, including services.
It anchors the entire economy, including services.
Like people that lose steady paying jobs that pay for pensions etc will not want services like restaurant, movies, haircuts as often, nails, music lessons for kids etc.
Not all services are equal. Services were lost during COVID & never recovered & anyone who has lived in a country with high services & informal jobs know that u cannot steadily gain income on gigs.
U need a steady pay check. At the national level, it is millions & hundreds of millions account compounding to give national savings and investment.
Not all services are equal. Services were lost during COVID & never recovered & anyone who has lived in a country with high services & informal jobs know that u cannot steadily gain income on gigs.
U need a steady pay check. At the national level, it is millions & hundreds of millions account compounding to give national savings and investment.
Take the highest exposure the US has for Chinese goods - toys.
A toy manufacturer employs hundreds of employees in China. In the Reuters story 400.
Losing 400 jobs isn’t just that. It is an entire household’s income. So it compounds in impact.
As Chinese people likely have their own home, they don’t default on their debt and go homeless, but they will just consume only essentials for a while.
Everyone’s discretionary goods get cut. And if u know something that this happens to, u will worry too as sentiment is contagious.
And for the US, the 15 people employed to distribute/sell toys, may or may not lose their jobs because they still got inventory to distribute. They will eventually in a year or 7 months run out of stuff to sell. And this compounds as well.
But they can find other jobs. But the number that gets compounded smaller.
And secondly, maybe they can source from Vietnam or wherever. So the impact for the US is both lagged & not total.
This is why anyone who says China has the upper needs to understand that only in PAIN tolerance & not DEGREE of pain.
A toy manufacturer employs hundreds of employees in China. In the Reuters story 400.
Losing 400 jobs isn’t just that. It is an entire household’s income. So it compounds in impact.
As Chinese people likely have their own home, they don’t default on their debt and go homeless, but they will just consume only essentials for a while.
Everyone’s discretionary goods get cut. And if u know something that this happens to, u will worry too as sentiment is contagious.
And for the US, the 15 people employed to distribute/sell toys, may or may not lose their jobs because they still got inventory to distribute. They will eventually in a year or 7 months run out of stuff to sell. And this compounds as well.
But they can find other jobs. But the number that gets compounded smaller.
And secondly, maybe they can source from Vietnam or wherever. So the impact for the US is both lagged & not total.
This is why anyone who says China has the upper needs to understand that only in PAIN tolerance & not DEGREE of pain.
The pain will be immediate & it will hurt the most vulnerable. Full stop. And after years of economic slowdown already. The 5% GDP growth of China doesn’t show high leverage & declining industrial profits & poor sentiment.
And this is why we got de-escalation. Not just Trump needing an off ramp but also one that China cannot afford, unless tolerating pain is a strategy & pain on the US side may or may not come as they can try to buy toys somewhere else.
Toys is an example. Somethings are much more key to industrial output than toys obvs. Like intermediate goods such as rare earth. But that is not even rare just that no body wants to do as it has little economic value and high costs of pollution.
And this is why we got de-escalation. Not just Trump needing an off ramp but also one that China cannot afford, unless tolerating pain is a strategy & pain on the US side may or may not come as they can try to buy toys somewhere else.
Toys is an example. Somethings are much more key to industrial output than toys obvs. Like intermediate goods such as rare earth. But that is not even rare just that no body wants to do as it has little economic value and high costs of pollution.
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