Supply imbalance and demand decline — on the world economic trend in the post epidemic era!

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Author: Sheng Tang rushong source wechat official account: the chief shopkeeper’s knife has been authorized to reprint

After more than two years of epidemic, the appearance of the world has changed beyond recognition. The so-called appearance refers to the economic development situation of various countries and regions. Although these changes in the development situation are caused by the epidemic, we still call it appearance. Because the inner, essential things have not changed. The epidemic is only one factor that has accelerated trends. For example, the outbreak of the war between Russia and Ukraine is one of the most essential factors in human society. The dependence on security, the desire for wealth and other forms of human desire are not only the cornerstone of promoting the development of human civilization, but also the factors leading to the instability of the world. Fear is not. Fear is just a temporary human stress response, and will not become the mainstream factor for the world to move forward. People’s response to the epidemic is one kind of fear.

Although all countries are suffering from the economic downturn in the post epidemic era, there are only a few countries and regions that can really change themselves and affect the world, such as the United States and its North America, China, its East Asia and Europe. These are the three major economic and industrial centers in the world. Their performance is not only related to the growth or decline of their own development quota, but also has a crucial impact on the global economy. Therefore, the trends of the three regions are the most valuable reference for the world economic trend in the post epidemic era.

In fact, Europe does not need much analysis now, because its current economic trend is mixed with the Russian Ukrainian war. This makes the European economy very uncertain in the future. Although the European countries’ sanctions against Russia are in full swing, according to our experience from the Second World War, the European surrender [should be soft] is also very fast. Hitler was able to quickly occupy the whole territory of Europe, not because of how superb his lightning tactics were, but because of the unexpected speed of European surrender. Among them, France, the current European leader, has the most experience. According to the current level of energy security in Europe and the huge pressure on European stability brought about by the Russian Ukrainian war, Germany and France should restart the Minsk agreement before this winter.

But it is not the Europeans’ the final say that can restart the success, but Putin’s the final say. As far as the current situation is concerned, countries outside Europe do not necessarily hope that the war will end as soon as possible. Although Europe is old Europe, its meat is still firm and its bones are pithy. The support provided by countries outside the region to the belligerents’ War capability is enough to make Europe feel worse than death in the next oneortwo years. Nowadays, strikes have begun to break out in Britain. Next, France, Germany and some European countries with worse affordability will also surge.

To sum up, the current European sample has no analytical significance.

The economic crisis from the United States is called supply imbalance. In other words, Americans do not have money, but money can not buy things. However, the reason why Americans are rich is not that they have used the industry to earn the corresponding currency, but that they have started the money printing machine, implemented a two-year currency over issuance, and distributed the money to the society in the name of epidemic relief. With this move, the United States safely passed the subprime mortgage crisis in 2009. At that time, the US government gathered the Federal Reserve to do the same. We will use excess US dollars to buy goods from the world, and quietly spill inflation to the world, so that people all over the world will pay for it. This time, from trump to Biden, they came down in one continuous line and followed the same pattern. Why do two seemingly different politicians take the same risk aversion? The reason is also very simple, because this method is too easy to use, too easy, and too easy to search for global wealth. When there is no crisis, the United States has been doing so, not to mention now that there is a crisis, we need to take emergency measures.

But this time it seems to be different from more than ten years ago. The last time, the subprime mortgage crisis broke out in the United States. Although the global economy was greatly affected, the productivity was not affected. This makes it easy to buy the products you need in excess of US dollars. In addition, at that time, China did not have a strong ability and foundation to confront the United States. [confrontation ability can be understood as insufficient strength, and the basis for confrontation is that at that time, there was no trade war launched by trump against China before the outbreak, which made China have stronger public opinion against the United States]. When the world has no country to take the lead in combating the inflation overflow of the United States, countries around the world can only let the dollar kill them.

But this time, the situation is very different, because the epidemic has led to the stagnation of the global economy and industry. In particular, within one and a half years after the outbreak, China is the only large economy in the world that maintains normal industrial operation and healthy and positive economic growth. This makes the flow of excess money issued by the Federal Reserve and dollars issued by the U.S. government very single – China. At this time, China will have greater confrontation capability. This single flow of dollar inflation, let alone China’s unwillingness to accept it, is also willing to accept it. This will inevitably lead to high domestic inflation. Under such circumstances, the Biden administration’s insistence on not canceling the tariff policy on China implemented during the trump period is a divine help.

Some people would say that the Biden administration has another deep meaning. Because as a sophisticated country playing with finance and global strategy, how can it make mistakes on such basic issues? In fact, as early as half a year after the outbreak of the epidemic, I began to write some “isolated island” articles, that is, after the full outbreak of the epidemic in the west, China has become an industrial island and the only systematic capacity supplier in the world. So, normally, Americans will not fail to understand this. Recently, however, Yellen, former chairman of the Federal Reserve and current US Treasury Secretary, began to review his misconceptions about inflation, and US President Biden also began to say that the US government had made mistakes in dealing with this inflation from the beginning. The remarks of these senior US officials are enough to prove that they have indeed encountered a dark light in dealing with inflation this time. They did not see clearly the essence of the US inflation this time, so they made the US inflation higher and higher. Now they have to admit that they have made mistakes.

From this, the white house trade representative, the Chinese American woman named Dai Qi, insisted that she would never abolish tariffs on China, or it was not her professional knowledge, but only her instinct of hating China. In her view, even if the United States is on the road of no return, it must not take advantage of China. Of course, if she played the role of juntong sixth brother, I would be shocked. And whether China needs the kind of cheapness she thinks it needs or not, in fact, two things. For the current US inflation, it is obviously beneficial for the us to import more products to absorb part of the US dollar. But we can not say that this is harmful to China. With the dollar dominating the world, if we can export more products and get more dollars, can we also buy more global resources? The dollar is a sickle in the hands of Americans. Isn’t it good for us to use it? This may be the internal reason why Dai Qi refused to cancel the tariff on China. As long as China is not allowed to do well, it doesn’t matter if the United States is dragged to the funeral.

However, in the hearts of American elites, the United States will not be buried with them. As long as the lock of supply imbalance is unlocked, the United States can escape. There are three ways to break through the supply imbalance. One is to strengthen its own industrial system. This is too slow. The other is to find an alternative supply base in China. Although this is feasible in theory, it is too cumbersome to really build the ideal framework. The last one is to simply abolish tariffs on China, then negotiate with China, and finally build a win-win model rather than a competitive model. This is what the Biden administration is hesitating about.

Supply imbalances have led to high inflation in the United States, and the solution is in front of us, but Americans are absolutely unwilling to do so. The United States needs China to be part of the global system under its control, not a rival partner. Moreover, as a partner in today’s China, many people are unwilling to come. Of course, there are also some people who want it urgently. This is where our internal disputes lie.

So the problem came to China. Today, China also faces difficulties, but our problem is not the imbalance of supply, but the decline of demand. The main reason for the decline in demand is that the global economy, under the influence of the epidemic, has led to difficulties in China’s industrial transformation. From focusing on the primary and secondary industries to balancing the development of the tertiary industry. Nowadays, China’s tertiary industry has been seriously affected by the epidemic, which has led to the decline or even loss of income of many employed people in the tertiary industry. Due to the epidemic prevention and control, we cannot open the external service revenue industry at present. [tourism, aviation, etc.], and the internal circulation of the domestic tertiary industry is also facing severe challenges, which leads to a gap in our domestic consumption. To solve this problem, the first is to expand product exports and use the income of the secondary industry to make up for the lack of the tertiary industry. The second is to slow down the domestic epidemic control in an orderly manner, so as to realize the recovery of the internal circulation of the tertiary industry. Although this can not return to the pre epidemic level, it can ensure that a large part of the employed people in the tertiary industry can get the minimum economic income guarantee. The day before yesterday, it was said that a hundred yuan in your pocket is dead money, while it becomes living money when it enters circulation. If we make more and more living money under the internal circulation mode, it is a problem that our government needs to solve.

Relatively speaking, both China and the United States are facing difficulties. Given the uncertain economic prospects in Europe, the economic trend of China and the United States is related to the future of the world economy. This is a critical moment. How to make a choice is a test for everyone. China and the United States are no exception.

But in addition to economic issues, the world is now more inclined to political issues. Otherwise, the US government would not be so crazy. On the one hand, it would face off with Russia in Europe, and on the other hand, it would challenge China in Asia. This is the biggest uncertainty. Political choices have turned the minds of both parties into granite.

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