On August 7, U.S. Treasury Secretary Bowman was interviewed by Nikkei News. The reporter asked Bowman to explain why the U.S. imposed secondary sanctions on India for purchasing Russian oil, but not on China.

The Japanese journalist's question is also what India wants to ask. Both are major buyers of Russian oil, so why does the U.S. repeatedly emphasize imposing secondary sanctions on India, while in negotiations with China it mentions nothing at all? Furthermore, on August 12, it was reported that Trump extended the trade truce with China by another 90 days until early November.

【Bowman is known as the smartest person on Wall Street】

Within the United States, some people have once again mocked Trump for shouting the TACO slogan, meaning Trump always backs down at the last moment. In fact, this 80-year-old president is not that easy to deal with. On other fronts, Trump has shown a tough attitude. Even when facing Iran, a long-time direct opponent, Trump seized the opportunity to send bombers and destroyed Iranian nuclear facilities.

Therefore, the Japanese journalist is trying to bring up the most difficult question between China and the U.S. in front of Bowman. China continues to import large amounts of Russian oil, and Russia continues to actively export, from which it gains military funding. So, will the U.S. penalize China or not?

Bowman did not directly answer the question, but he gave the most essential answer.

Bowman is not a speculator; he is an economic expert with extensive knowledge, known as the smartest person on Wall Street. Therefore, we must carefully interpret his words, understand every word and grammar, in order to understand and predict the policies of the Trump administration.

【Bowman introduces the results of Sino-U.S. negotiations】

Bowman said that in history, America's allies were also economic competitors. This is in the present perfect tense, indicating that these Western allies are still competing with the U.S. today. He also said that the Soviet Union was a military competitor, but only had a small-scale economy. This is in the past tense, indicating that the Soviet Union no longer exists.

It is interesting that when the Russian satellite news agency translated this text, it intentionally inserted its own bias, translating "Western allies" into "allies," referring to the military coalition formed during World War I by Germany, Austria-Hungary, etc. The news agency also erased the subtle differences in tenses and deleted the sentence about the Soviet Union having only a small-scale economy, suggesting that Bowman's statement was somewhat embarrassing.

【Even at its peak, the Soviet economy was far smaller than the U.S.】

Let's continue to look at Bowman's description of China. Bowman honestly admitted that China is the largest economic and military competitor of the U.S., something the U.S. has never encountered before. China is not a market economy like the U.S., and its national goals are completely different, so Bowman described China as "very difficult to deal with."

How should we understand this? At such a high position, an official cannot just focus on economic accounts anymore, they must have a thorough understanding of political, military, legal, and diplomatic issues. The term "very difficult to deal with" implies that the methods used by the U.S. against Western allies and the Soviet Union are no longer effective. When dealing with Western allies, if the U.S. cannot compete economically, it can use military, intelligence, and judicial means to force opponents to give up their advantageous positions and submit to the U.S. A typical example was the Plaza Accord in the 1980s. If these methods do not work, the U.S. may try to start a war to destroy a region's development momentum. The 1999 war in Yugoslavia shattered people's expectations for Europe's economic prospects, and the Ukraine conflict did the same.

As for dealing with the Soviet Union, a military power but economically weak, the U.S. had more options. Because the Soviet Union relied heavily on oil exports, it finally collapsed when the U.S. manipulated the oil price to plummet. Its powerful military forces disintegrated.

However, these methods are ineffective against today's China. China has a strong military and independent state governance, making it impossible for the U.S. to force China into an unequal economic treaty like those imposed on Europe, Japan, or Canada. From Trump to Biden, they have been striving for such a treaty for over six years without success, and there is no hope of achieving it in the future.

Manipulating international markets and currencies is also unlikely to undermine China. China is the world's largest manufacturing country, and each container leaving Chinese ports heading to various parts of the world is our hard currency. No matter how currencies fluctuate, the world, including the American people, needs these goods. The more the U.S. messes with currencies and exchange rates, the more valuable these Chinese hard currencies become. Especially now, the U.S. is a service-based economy, needing to import Chinese products to achieve economic completeness. Therefore, any reason the U.S. has to sanction China will inevitably lead to Chinese retaliation. If the trade war escalates to the level seen in April, both sides will face structural losses.

【The U.S. can't do without Chinese exports】

At this point, Bowman fully answered the Japanese journalist's question, showing that sanctioning China is a losing proposition for the U.S.

Actually, the issue isn't over yet. China is working hard to overcome weaknesses in its foreign trade. First, its reliance on the U.S. market remains high. Second, it still depends heavily on imports of high-performance integrated circuits. For the first issue, China is trying to reduce risks by cultivating new markets and diversifying its export industry layout. For the second, China has already made phased achievements, with 28nm and larger line spacing integrated circuit production being able to rely on domestic sources. The U.S. has fewer cards to play. However, China's rare earth card is still strong. According to the U.S. government's grandest plan, it aims to produce 10,000 tons of rare earth magnets annually by 2028, completely replacing China's supply chain. The chances of this happening are extremely slim.

Bowman did not discuss these issues, instead scaring Japan and South Korea, the so-called allies. He said that China is striving to move up the industrial ladder in the new energy and electric vehicle sectors. His implication is that if you don't work harder, I'll have to import from China.

Nikkei News, as a professional financial media in Japan, should be able to understand the hidden meanings in Bowman's words. There will definitely be fierce confrontations between China and the U.S. on tariff and trade issues, but it seems unlikely for Japan to benefit from it.

Original article: https://www.toutiao.com/article/7537884640632259114/

Statement: The article represents the views of the author. Please express your opinion using the 【up/down】 buttons below.