The ongoing US trade war against China will have deep longer term repercussions, independently of whether a trade deal is reached to end it. Had it only been a question of erratic actions by a lunatic president, the effects could have been limited. But Trump is not alone. The general mood in the US establishment is that China should be contained, or even rolled back. So the key-word is now ‘disentangling’ of the US economy from China.
Thorbjørn Waagstein, Economist, PhD, since 1999 working as international Development Consultant in Latin America, Africa and Asia.
The ongoing trade war that the US has unleashed against China will change the history of the 21st century, independently of whether an agreement is eventually reached between the parties or not. It signals the decision of the US to prevent China from growing into an economic superpower, using whatever means it has at hand. But this is an extremely dangerous and futile policy. China has more than four times the population of the US. As it develops, its economy will inevitably surpass the US. There is nothing the US can do to prevent that, so they will have to find out how best to live with it. Unfortunately, this is not how an important part of the US establishment sees it.
It has been common to say that the main strength of the US political system is its checks and balances. The three branches of Government are balancing each other out, and the free press and civil society in its many forms contribute with more checks on the system. Sometimes this is still true. But in many cases the result is dead-lock and a non-functional system. Most worrying is that in the fundamental case of war and peace, it simply does not work. This puts the whole world in danger.
The automotive industry is on the brink of a major upheaval due to the arrival of electric vehicles. Not only cars, also delivery vans, trucks, buses – you name it. After the automotive industry tried to pretend for years that nothing serious was going on, it is now increasingly clear that change is unavoidable, and may come much faster than many think. There is presently a lot of arguing and sweating in the board rooms. Some will take right decisions, some will take wrong. Some well-known car companies may survive and prosper – others may disappear ingloriously in the coming years. But change will come.
Electric vehicles are presently ridiculously expensive. Could be the cost of the battery, couldn’t it? That is only part of the explanation. The other is scale: the production volume is too low to secure economies of scale. And to this comes a lack of competition: existing car producers are not really interested in selling quantities, as they will cannibalize their own profitable traditional car business. The answer is regulation and more competition. Not more subsidies.
We have just seen a flurry of new reports on Climate Change, and they are not funny reading. Before we fall into gloom and accept that the end is nigh, the good news is that with what we already know and the instruments we have at hand, it is absolutely within our reach to avoid the worst climate change scenarios, and the cost is absolutely not scaring. But it needs bold and determined policies and willingness to take risks. The lack of capacity for this is the biggest risk we are facing.