There’s a great deal of talk in the news about the tariffs President Trump has imposed, and/or threatened to impose, on imports from China. That’s an ongoing issue that isn’t likely to be resolved overnight. However, it’s worth bearing in mind that, while the US economy overall is larger and stronger than the Chinese, that’s changing fast.One example is that General Motors has for some years sold more cars in China than it does in the United States. Most recent figures, for the second quarter of 2018, show that GM sold 758,376 units here, and 858,344 in China. That’s a difference of 99,968 vehicles, or over 13% more sales in China than in the USA. Other companies are rapidly approaching the same threshold, or even passing it.
Other major economic indicators are also slowly but steadily swinging in China’s favor. This morning Flight Global reported:
For a one-word summary of the megatrend shaping the world’s commercial airliner fleet, read simply “China”. Our annual World Airliner Census, built on Flight Fleets Analyzer data, reveals that during the past year the distribution of the global fleet crossed a milestone. A year ago, North America – always the biggest fleet region – led the in-service jet table with 30% of the global total, ahead of Asia-Pacific and China, with 29%. This year those percentages are reversed.
(Bold print is my emphasis.)
Tariffs are intended to restore a level economic playing field between the USA and China . . . but, as the saying goes, “quantity has a quality all its own”. The US population is about 327 million people. China has approximately 1.415 billioninhabitants – outnumbering the USA by well over four to one. As China’s population earns more, and is able to afford a higher standard of living, China’s internal markets will become much larger than the USA’s, and its economy will inexorably power past ours in every respect. Within 50 years, the USA will be far behind China in terms of overall economic numbers (unless something catastrophic happens to change that).
Tariffs can provide a short-term equalization impetus, but they can’t change that reality. In the not too distant future, China will be in a position to impose its own punitive tariffs on other nations, and make them stick. It would be wise not to provoke the dragon too much. It has a long memory.