Mike Norris, Co-Editor, The American Dossier
On Tuesday, the Chinese government issued two travel alerts for Chinese citizens heading to the U.S., the latest salvo in the trade war between the U.S. and China.
China’s Culture and Tourism Ministry warned its citizens against working, studying or traveling to the U.S. "Recently there have been shootings, robberies and thefts happening frequently in the U.S. The Ministry of Culture and Tourism reminds Chinese tourists to fully assess the risks of going to the U.S. for travel," an anchor on Chinese broadcaster CCTV cautioned.
The same day, China's Foreign Ministry issued a security alert for Chinese citizens. "For some time, U.S. law enforcement agencies have been harassing Chinese citizens with interrogation upon entry or exit, and on-site interviews, among other forms," the ministry stated on its website.
The travel notices are part of a growing propaganda war being delivered by China’s leadership via state media. Articles in Chinese newspapers focus on U.S. "trade bullying" and "hegemony." In a recent editorial published in party mouthpiece the People's Daily, the U.S. was labeled the "enemy of the world."
Eager to paint the trade war with the U.S. as a necessary struggle against a colonial power, Chinese state media has increasingly referred to a Korean War battle between U.N. and Chinese forces. In the 1952 battle of Triangle Hill, Chinese and U.N. forces suffered approximately 50,000 casualties after 42 days of intense fighting. In Chinese culture, however, the battle has been glorified as a turning point in the war when Chinese soldiers "defeated" the American invaders.
CCTV has also been airing an old documentary series titled "The Great War to Resist the U.S. and Aid North Korea," complete with historical footage and patriotic narration.
The political tit-for-tat being waged in the U.S. – China trade standoff signals that both sides are settling in for “the long haul,” as suggested in recent headlines from China. However, a deeper look at the Chinese economy reveals many of the conditions that drew the U.S. into The Great Recession.
Despite an outward appearance of strength and prosperity, the Chinese economy is an unstable market, unprepared for a prolonged trade war.
For decades, China built an economy that exported more than it imported. Today, China is on the verge of becoming a net importer of goods and services.
An advantageous income-to-debt ratio insulated the Chinese economy from global market forces for almost a generation. In 2019, China’s debt is approaching three times GDP — triple the debt-to-GDP ratio of the U.S.
Sustained deficit spending has shrunk China’s foreign cash reserves, reducing its ability to subsidize under-performing markets during a prolonged trade war. In 2010, China’s foreign reserves were nearly half of its GDP. Today, China’s foreign reserves are approximately a quarter of its GDP. Sustained trade deficits will accelerate that decline.
The Chinese economy also faces looming demographic challenges, caused by decades of social and family-planning policies; the ratio of retirees per worker will more than double in the next decade and a half. China’s economy long buoyed its trade surpluses with its citizens high savings rate, compared to individual consumption. As retirees withdraw those savings, they will put added pressure on the Chinese economy.
There is also concern about the growth in household debt. Easy money is driving mortgage and credit-card debt and creating real-estate bubbles. Empty shopping malls and condominium developments reflect the early signs of the U.S.’ own housing market crash in the late 2000’s.
Despite its Communist roots, China is experiencing a growing divide between its urban elite and its rural poor. The World Bank estimates that there are nearly 400 million Chinese who live below the international poverty line, surviving on less than $5.50 a day.
Any thoughts of the trade war ending if President Trump were to lose his 2020 re-election have been quickly dismissed. Although the Trump administration led the charge on the trade war with China, almost all of the 24 Democrats running for President in 2020 have anti-Chinese policies in their platform.
Having watched the American recession from afar, President Xi is preparing China for what he calls “a new Long March.” Xi understands that if the trade war between the U.S. and China continues, China is headed towards financial crisis that Beijing cannot stop.
Xi’s recent statements are meant to prepare the Chinese public for this eventuality.
With this in mind, China will likely be more willing to negotiate than their rhetoric implies.
Although there are no known talks scheduled, Presidents Xi and Trump are expected to meet at the G20 in late June. In the meantime, investors around the globe will be nervously watching.
After serving as an Airborne Infantryman in the 82nd Airborne Division, Mike attended Florida State University, where he received his Bachelors Degree in Political Science and George Washington University, where he received his Masters in Political Management.
Since 2004, Mike has worked in the Florida Senate, where he was one of only two Chief’s of Staff under 30 and in the Michigan Senate, where he served as the Legislative Aide to the Assistant Minority Floor Leader. The 2018 election cycle was Mike’s eighth as a Political Consultant.
Mike previously served as the Secretary and Vice President of the Tampa Bay Young Republicans, Regional Vice Chair for the Florida Federated Young Republicans and attended the 2012 Republican National Convention as an Alternate Delegate. He currently lives in Grosse Pointe Woods, Michigan, with his rescue Pit Bull, Ike.
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