The Coming China-Germany Trade Juggernaut

 

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In a post-American trade war, this emerging bloc will wield devastating power.

Stories of international angst over United States President Donald Trump’s protectionist approach are becoming more commonplace. Mr. Trump’s “buy American, hire American” catchphrase sounds good for many at home, but abroad, it is prompting a weighty reorganization of international trade relationships. And long term, the result will be a trade war that will prove ruinous to the U.S.

World trade has changed a great deal over the last several decades. The international community at large no longer depends on America’s giant import expenditures and exports. Parag Khanna of Politico wrote:

As Americans, it’s easy to assume that global trade still depends on America as the consumer of last resort. But that’s no longer true. In fact, the majority of trade in emerging-market nations is with each other, not with the U.S. In 1990, emerging economies sent 65 percent of their exports to developed nations like the U.S. and Europe, and only 35 percent to other developing countries. Today, that figure is nearly reversed. Continue reading

The Chinese Economic Offensive in Europe

 

Where the largest population in the world has set its sights

Englishmen: Did you know the Chinese now control House of Fraser? Italians: Did you know the Chinese now own Pirelli? Swedes: Did you know the Chinese now own Volvo?

Depending on how old you are, you’ll likely be either embracing or resisting the Chinese economic offensive into Europe. But if you’d been a Greek youth struggling with 50 percent unemployment in the eurozone crisis, you would have been loving the extra Chinese foreign investment.

China has been looking to break into Europe for decades; in the last five years, its efforts have finally paid off. From 2010 to 2014, Chinese investments in Europe went from $6 billion to $55 billion. And remember, that huge increase happened as China’s economy had been comparatively slowing down.

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The Silk Superhighway

Five years old, but vindicated, still quite relevant and accurate:

 

Who is China’s largest trading partner?

If you guessed the United States, you’re wrong. It’s the European Union.

If you got the first one right, here is another question: Who are the biggest exporters in the world? First place goes to the European Union. Second goes to China. Third would then go to Germany if it wasn’t already included within the EU. America comes in at a distant fourth place, followed by Japan.

The world has changed. Not long ago, America was both the largest exporter of manufactured goods and the world’s most important economy.

Yes, a shift is occurring—and it is titanic. Today’s global power centers of manufacturing and trade have swung back to Europe and China. The most important and lucrative trade routes are once again between the old world’s East and West. The modern Silk Road is swarming with the new merchants.

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