We are at war. In fact we've been at war for a couple of decades, but most of you just didn't know it. You think you know but you don't. I'm not talking about fighting the Taliban, ISIS, or other terror groups in Afghanistan or Iraq. We have been at war with China for quite a long time. We just haven't been fighting the war.
The Chinese want to be not only the most powerful military force in the world, they also want to be the dominant economic power. They have been winning the war on both fronts for at least 20 years. While I say we haven't been fighting the war, in a way we've been fighting in the 'liberal' way, by capitulating and giving them what they've demanded hoping China would stop their aggression.
China has been building both their military and economy by taking or stealing technology from the rest of the world. If you want to do business in China, you must 'share' your technology with the Chinese. Or companies like Huawei have been using their technology to steal information from the rest of the world. Have you seen the new fighter plane China built? The J-20 looks and performs very much like our F-35. That's because they stole much of the technology from American companies.
One of the things China did was bring manufacturing from the U.S. and other countries to China. Their long term goal is to be the manufacturing powerhouse subjugating us to being a supplier of raw materials and a consumer of Chinese products. Look at how much stuff we buy is made or processed in China? Toys, computers, chickens, and a lot of other products. And how much copper does FMI sell to China? Most of it. Without China, our economy doesn't run.
President Trump is doing a great job of bringing some manufacturing back to the U.S. but more importantly, he is getting companies to move out of China. Some are going to Vietnam, Indonesia, South Korea or other SE Asia countries. These countries want to have good economic relations with us and have or will make much more favorable trade deals with the U.S. That's putting pressure on China and weakening their bargaining position.
China devalued the Yuan this week. The mainstream explanation was that China wanted to keep many of their products affordable to us because of the tariffs President Trump will put into place in a few weeks. But those tariffs are 10% while the devaluation was only 4%.
The real reason for the devaluation is much more sinister. The U.S. dollar is becoming stronger, which means our products are more expensive. With the weak economies around the world, our exports will decrease. That hurts our economy. The huge drops we saw in the stock market this week are reflective of that realization. Quarterly projections for our economy are starting to turn bearish.
There's the key; we think about our economy in terms of quarterly expectations. The Chinese take a 50-100 year view. Everything they do, economically, militarily, socially, is thought of in terms of decades. They are happy to suffer in the short term if they believe their actions will achieve their long-term goals. We are not.
President Trump knows this, he wrote a book about it a long time ago. He's willing to engage in a longer term trade war and will try to pull the U.S. and other countries along kicking and screaming if necessary. We will be stronger in the long run if he's able to do that. I'm not sure he can but I for one am willing to adjust my focus, despite getting older and older by the minute. I'm willing to do so because it will benefit my children and my country in the long run.
We just have to convince others to do the same. There is no doubt in my mind that if we begin fighting this war with China on their terms, we can win on both fronts. In fact, convincing the snowflake generations that immediate gratification they've come to demand is not as beneficial as the long-term success we can achieve might be the hardest part of winning the war.