U.S., China Preparing for Divorce

U.S. President Donald Trump has recently launched an interesting threat when he warned China of cutting off the whole relationship. China’s success in making the U.S. economy more dependent and taking the current dollar as hostage has created unmatched anger in the U.S. The U.S. is getting more and more in debt day by day and China has created forex reserves in any part of the world and bought bonds and shares. It means all countries because of the amount of their debts to China, due to the sold bonds, have to open their markets to China and give concessions. Of course China has not been the only country which has achieved brilliant successes in their smart challenge with the U.S.

IRAN NEWS POLITICAL DESK

Japan, South Korea, Europe, Russia, India, Brazil and Muslim countries like Malaysia, Turkey, the UAE and Qatar have not only chosen this way to secure themselves from the sting and damage of dollar, they have also been able to continue their interests wisely by penetrating into the U.S. economy and politics.

The U.S. once controlled 40 percent of the world economy but today it has slumped to almost 20 percent and this decline in the hegemony of the U.S. economy still goes on. An informed person with an infrastructural knowledge had claimed in the virtual space that China is like a pain in the arse of the U.S. economy because when the U.S. plants and dollars fly to China, it is natural the amount of capital in the U.S. to decrease. Hence, the U.S. earns lower tax revenues, and as the result, its military budget would decrease and the U.S. Army would recruit small number of troops. It is as if China has killed thousands of U.S. troops and nobody has heard gunfire.

When the U.S. budget is cut, the number of its military planes, warships and tanks also shrink. It is as if China has destroyed them without firing a bullet. With such an analysis, one can stipulate that in the past 40 years, tens of U.S. troops have been killed by the Chinese every day, and every year tens of U.S. warships, hundreds of planes, thousands of tanks and hundreds of factories have been targeted and destroyed by the Chinese. How? China has done all these through economy and without firing a bullet.

China with a wise policy has expanded its economic infrastructure by taking advantage of cheap labor force and could take out billions of dollars of capital from the U.S. and bring it to China and attracted major big international companies.

But this is Iran’s government and nation who have innocently been targeted by the U.S. cruel sanctions, threats and wars, and suffer billions of dollars while Iranian governments instead of controlling the inflation have helped the monetary base to become bigger and bigger and they have not developed the gross domestic product (GDP) which can embed the volume of floating currency.

In this performance, one can see the economic system’s body in Iran has worn down and has been unable to follow footstep of China. High inflation has increased the wages and has reduced the power for competition in export quality products. Which current has caused the inflation in the country? It is the banks. Banks by creating money have made the country face challenges in pricing. People day by day have lost their purchasing power. Revenues have been limited and the prices have soared and poverty has been begotten.

China did not commit our mistakes or probably has not had some of our traitors, and by performing accurately the process of stabilizing the wages, it could enhance its power of competition in exports. China’s economic growth has made the U.S. become more dependent on Beijing so that if the U.S. cuts off its relations with China, the U.S. economy would cripple, and in absence of Chinese goods, inflation in the U.S. will rise sky-high.

So people in the U.S. will turn their back on the ruling government in Washington and the ruling president will concede defeat to his rival. In the past four decades all U.S. presidents (Ronald Reagan, George Bush father, Bill Clinton, George Bush jr., Barack Obama and Trump) in their presidential campaigns have vowed to stand firmly against China and have accused their rivals of nonfeasance and leniency towards China. But why have they come to terms with China after being elected? This exactly means that China plays the role of pricing in the U.S. economy. The U.S. governments have been forced to bow down to China in order that lest the U.S. people enter an economic crisis of failure in balancing cost and income.

Today, in any country where the volume of GDP is several times more than the currency in circulation, exports of products are economical and the nature of non-oil exports increases the credit power of the forex, and provides the ground for the flow of capital into the production.

Governments without having policies for creating the ground for economy are impossible to overcome effective political crises. The comprehensive path for poverty eradication in the capitalist countries is populist. Only in the populist capitalism, the country’s efforts are to improve the business environment, and it will be impossible to save people from poverty through limiting the economic growth with an eye on political party’s economic growth and increasing the Gini coefficient unconsciously. I will later in a separate article will review populist capitalism with its precise dimensions to know that the world will move exactly in which direction in the future.

 By: Hamid Reza Naghashian