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Questions about the euphoria for US stock market performance in 2011. Negative impact of housing market, rise in food and fuel prices, and the precarious condition of state and local government finances, raise concerns about the economy and stock markets for 2011-2012. John Makin sees a one third chance of sovereign debt crisis in the eurozone, and a 40% chance of China not making a soft landing, in a video interview with Wessel of the WSJ, December 30, 2010. This would impact stock markets in the US. WSJ's Brett Arends column also expresses similiar skepticism. Robini sees housing losses in 2011.

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India is a frugal innovator producing satellites for space at a fraction of the cost. NASA sent Maven, a probe to Mars for $671 million, it cost India $74 million to send an orbiter to Mars. Yet India as one of the few space exploring nations has only 3% of the market. Invest India, India's investment promotion agency says this will increase to 10% by 2030. In March India's NewIndia state owned space agency sent three dozen space satellites for OneWeb into space after launches by Russia were stopped. In 2023 the US is the largest by far in the space sector economy. China and Russia are also in this space.

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The title of this BBC report is a misnomer as the content of the report is that India and the US are actively negotiating a Trade Agreement after some disagreements on Indian oil purchases from Russia bumped up from 2% before 2019 to about one third to 40% of its imports by 2024. This is being rapidly reversed and some estimates by consultants CLSA show India only made $2-3 billion from Russian discounted oil sales, a miniscule amount. On American interest in agricultural exports India can take in some products other than grain which it sees as important to feed 1 billion people and food security.  DJT says the "special relationship" between India and the US is important, and says "there's nothing to worry about. We just have moments on occasion". India has much bigger stakes in trade with the US. In fact it's growth into the third largest economy in the world means doubling or tripling its trade with the US and the European Union in the next few years. This would narrow the difference in GDP and per capita between India and China, as India and China started at the same GDP and per capita in 1950. Only in 1990 with China's trade with the US has the Chinese GDP and per capita income increased to create the huge gap with India. ...

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A second term Trump-Vance will face uphill risks and a mess in economics from a Trumpian Republican party and Congress, says WSJ. WSJ Editorial Board says a second Trump term is not without risks. Tariffs cost 1.1% in annual growth in the Trump first term says WSJ, and it did have an impact on inflation. It would have had greater impact on inflation with the supply chain crisis of Biden's first term, had this supply chain crisis happened in Trump's first term. A second term Trump-Vance support tariffs as high as 60% on Chinese imports which would have a bigger effect on inflation and economic growth than of the first term. The key difference is that with tax cuts a basic rule for Republican policies Trump-Vance second term would not invest in infrastructure the way Mr. Biden has done and Biden will do so in a second term. As a result the economic growth is likely to be greater and inflation smaller under a Biden administration. Trillions of dollars in investment in the economy and infrastructure under Biden in a second term will be missing in a Trump-Vance tax cuts administration policy. And with it hundreds of thousand of jobs created each quarter will be missing in Trump-Vance second term. Add to this the level of clarity of stable economic policy under a Biden second term and contrast it with some of the chaos in economic policy of a Trump-Vance second term. The basic contradiction between tax cuts policy and the nation's need for infrastructure spending/rebuilding under a Republican under Trump administration will not go away, present a huge stumbling block. Chaotic policy could come from Project 2025 that says consider abolishing the US central bank Federal Reserve. This kind of erratic and unwise policy proposals are clearly not happening under Biden and Yellen. Another key difference is the cost to the economy of delays of several years in doing nothing for climate in Trump-Vance 2024-2028. Severe effects on climate if nothing is done could cause acceleration of climate negative costs which a future economy under Democrats would face, in reality the Nation would face. America's Business has taken a short term approach to climate change, when the time comes to pay the costs of short term thinking it assumes it is somebody else's problem- this happened with supply chain concentration in China the burden falling on the middle and lower classes, it would happen again with missing climate change action under Trump-Vance second term. ...

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China's GDP declines by 6.8% in the first quarter 2020 year over year, and 9.8% from the previous quarter, the first such decline since 1992, even going as far back as 1976 with the passing of the Mao era. It is not power production or coal consumption which have returned to prior levels. It is the demand from the U.S. and Europe, other countries which are in lockdowns. Estimates are that 80 million people in a population of 900 million working age people lost their jobs, with another 10 million expected to be lost, about 10% of the total. Global trade companies are hardest hit.  Consumers inside China are reducing spending. Some are using only the small government issued vouchers designed to get people to go out and spend.  The Trump administration plans to bring back some of the production lost to China in essential areas such as public health and security back to the U.S. The supply chains are already shifting to other countries from U.S. tariffs. As a result some estimates show zero growth in 2020 for China. Financial instability and prior leveraging concerns remain to prevent any serious stimulus. By contrast the U.S. is cushioning the impact with $2 trillion aid package benefitting from a strong dollar and healthy economy before the virus. ...

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China drop in exports to US May 2025 YOY is 35%. China exports up 4.8% to World May 2025 YOY. It shows China is making up for loss of exports to the US with tariffs by increasing exports to the European Union and to South East Asia. 

China's trade surplus is still increasing, increasing from $96 billion in April to $103 billion in May 2025 with European Union and rest of the world picking up Chinese exports as domestic demand is still soft with factory gate prices dropping 3% in May 2025 YOY. China's plan was to increase exports with debt restricting stimulus for domestic economy, growth depends on exports. It now depends on the EU's taking in China's surge in exports.

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Cheap abundant coal supplies support the Australian lifestyle and standard of living. Australia is a big exporter of coal. Here prime minister Morrison is shown with coal in his hand in parliament lauding its benefits to the Australian economy as a source of its wealth. Only now with floods, drought and fires is the real cost of coal becoming apparent to Australians. In elections in 2021 Mr. Albanese of Labour party replaced Mr. Morrison and promised changes. Mining interests and jobs influence key swing constituencies in elections leading to the impasse on climate change action. As one of the windiest and sunniest places in the planet Australia says the OECD is in a position to play a large role in renewable energy. This suggests that policy so far has been shortsighted. Worse it may have fueled the rise of temperature on the planet by providing cheap coal for China to grow at rates close to 12% for decades.

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In this thoughtful essay Bob Davis of the WSJ asks whether the decision of the Clinton administration to admit China into the World Trade Organization was a bad one for the U.S.  Mr. Clinton in 2000 tried to persuade Congress citing words of president Woodrow Wilson that of a dream "of a world full of free markets, free elections, and free peoples working together."  Every year China would have its most favored nation status renewed with help from supporters in Congress. After WTO entry this was not necessary. Chinese leaders saw the entry into WTO as a way to knock down trade barriers, to act a wrecking ball for the planned economy, to give the economy a big boost.  In 1994 China was a relatively backward economy with 60% of the population living on less than $1.90 a day. Hard to imagine today.  Not everyone was convinced that it was good for the U.S. This included a trade attorney who had tackled a huge trade deficit with Japan in the Reagan period- Robert Lighthizer. Lighthizer was Deputy Trade Representative negotiating with the Japanese. His prediction was that no job in America would be safe once China entered the WTO, that China would become a dominant trading nation.  Robert Cassidy, 73, trade negotiator for president Clinton looks back on that time and says that he regrets what has happened, that all his work night and a day only benefited business and hurt workers. David Autor, MIT economist and his colleagues,  in a later study documented loss of 2.4 million jobs to Chinese competition between 1999 and 2011, in many manufacturing towns dotting the landscape of America, particularly in the midwestern states. And the expectation that the higher economic growth would lead to less political control did not turn out to be true.  In the process multinationals rushed to China after WTO entry and China became the world's manufacturing floor. By 2013 China's per capita income reached $7000, after years of fast GDP growth approaching 10% a year.  About 400 million Chinese were lifted out of poverty from living on less than $1.90 per day from 1999 to 2011, according to the World Bank. A big problem was that the U.S. did not plan for the change from WTO entry. No resources were allocated for the plan to let American workers adjust through worker retraining and special trade handicapped income support, to allow for a slow planned shift. Instead the pace of growth was faster than that which the U.S. faced with the Japanese export offensive in the eighties. China experienced double digit growth after 2000. The irony is that the Republican administrations that followed Clinton followed a policy of free trade to the advantage of China's state run economy when working class Americans voted mostly for the Democratic Party. Little was done and little said in the media from Democrats and Republicans in Congress and the establishment during this time even after Mr. David Autor documented the effects of trade in the U.S.  Till Mr. Trump recognizing the alienation in communities hit by job losses from trade upended American politics, shifted this part of the electorate to the Republican base. Mr. Lighthizer's view is that complaints about China should be left out of WTO because it is naive to tackle it that way. With a $375 billion China trade deficit for 2017 the challenge has to be met in a different way, and the U.S. has to rely on regaining its economic strength within a fair trading framework. Having negotiated with the Japanese Mr. Lighthizer sees the approach adopted then as the one right for today. During the long negotiations Lighthizer is said to have received many negotiating positions of the Japanese signifying no change in long sessions. He once simply made a paper plane and sent it right back, in one of these sessions. He meant that the U.S. was serious about reversing the imbalance in trade. ...

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It may come as a surprise that changing retirement age in France faced huge opposition yet was enacted into law for moving it from 62 years to 64  years in 2023,  but was never acted upon in China where it is 60 years. China raises its retirement age for men to 63 years from 60, to be done incrementally a few months at a time till 2040. For women it goes from 50 to 58 years, 55 years for blue collar workers. Why the hesitation. It appears that there is much age related discrimination in China so that many workers feared they would be laid off in their fifties and not get pensions till 60-64 years. This could have created much unrest as it did even in France where there is more discrimination for age than other parts of the EU.  When countries have aging populations do they have an alternative? How could they support pensions at 60 or 62 years as in France and in China? In China the social safety net is weak which leads to more resistance and caution by the government fearing unrest. Yet it is not the best time to tackle this problem as the economy slows, resources are constrained, and there is higher unemployment. ...

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The new Australian budget is designed to generate a slight surplus from the A$44 billion deficit for the fiscal year ending June 30. This prepares the Australian government of Julia Gillard for elections in 2013. The budget depends on the mining boom to generate the tax revenues for planned economic growth of over 3% in 2012-2013. This is based on the large number of projects planned for investments in oil, gas and other energy projects, valued at US$456 billion. GE as supplier of turbines and other products to the Chevron-Total gas project and other projects in Australia, has sales in Australia match its sales level in China in 2012-2013. This gives an idea of the extent of the boom in the mining and energy sector. Even the widening trade deficit to A$1.59 in March 2012 reflects large imports for the mining sector. The weakness of this approach is that too much is dependent on the mining and offshore gas boom. Retail spending is weak and Australia is increasingly looking like a two tier economy, subject to the boom and bust cycles that its mining companies have experienced in the past. A bubble in Australia's housing markets and uncertainties in the global economy pose other risks....

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2014 Xi visits Gandhiji's Sabarmati Ashram as is shown in this picture in BBC News and is curious how the weaving is done by hand taking a try at it with prime minister Modi, both sitting on the floor Asian style. In 2020 China advances its troops in a part of Ladakh leading to a clash with Indian forces. What happened? India's resilience in the face of the pandemic and the bright future for its economy, greater integration with the American and European Union economies in its draft plan to 2030. A sense in China's leadership that India's modernization would follow in the same way that China's and South Korea's have followed Japan's modernization. A sense also that better relations with the US and the European Union would require better relations with India, as an indispensable condition. A sense also that the issue of Taiwan was a bigger issue and a core interest for China than the border disputes in the remote regions of the Himalayas. It just did not make sense to have a conflict with India in the priorities of China to 2030 or 2040. That India needed to be seen not through the lens of the British but as an ancient nation that had similarities with China and Japan from its Buddhist roots. ...

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Canadian steel and lumber industries get government aid, as talks to end US tariffs are halted over an ad on Reagan misrepresenting him on tariffs by Ontario state.  Canada's steel and lumber industries will get the aid in the form of railway costs cut in half with rail subsidies, and tariffs on US steel imports into Canada to reduce domestic steel costs for other industries. Stellantis shifts car production for a new Jeep from suburban Toronto to Illinois, GM cut a shift at a pickup plant and closed a electric van plant in Ontario. Not all imports to the US from Canada face tariffs. Other products enter the US from Canada under a free trade agreement USMCA that went into effect July 1 2020. Canada is also shifting policy under Carney's Liberals on climate change, as it seeks to reorient its economy to export oil to China and India- a new pipeline is now approved for oil and gas to be shipped across the country from Alberta. Since it's independence with Dominion status in 1867 Canada's economy has struggled with the idea of building a economy separate from the US so that trade between the northeastern Canada and Northeastern US which is next to each other is foregone for trade with distant provinces in the western states such as Alberta and British Columbia. In Brazil Lula's Worker's Party is also slowing efforts on climate change for the economy as it approves oil and gas projects in the Amazon, at the same time as it holds COP30 at Belem port in the Amazon. Even Biden had shown flexibility on the economy to support cost of living measures that are in conflict with climate change action. In DJT's second term climate change action has taken a back seat to cost of living concerns when a large majority of people are living paycheck to paycheck. ...

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Mitt Romney states the case for supporting free trade both in principles and practice. Acceptance of the staus quo allows China to game the world trading system, says Romney. In the end accepting the status quo may do more damage to the world's trading system than any efforts to correct the misalignment in currencies and failure to rebalance the world economy. He questions the passive approach of some members of Congress and the Obama administration on the grounds that starting a trade war makes them nervous. China with $273 billion more in exports than imports to the U.S. has reason to see this issue objectively, even with all the noise it is making about trade retaliation, suggests Romney. Other experts have pointed to the problems the misalignment creates for China's economy. A New York Times editorial on October 15, 2011, cites figures from the Peterson Institute of Economics showing this costs China $240 billion a year through trade surpluses in dollars that are declining in value. For years China's fears are that this would lead to higher unemployment. This New York Times editorial points out that jobs have increased by about 1% a year since 2004, even with 10%+growth, because many of the manufacturing jobs use advanced manufacturing technologies. A firm response today also makes it possible to avoid the kind of sudden response that could take place later on if public opinion overwhelmingly shifts away from trade with China under status quo conditions. ...

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Wang Yi, a senior adviser for China's decarbonization strategy and 5 year plan has this to say about China's approach to climate change. Yi says it is more important to focus on what actions are to be taken between now and 2030. Here he says China has outlined concrete steps that it will take that the world media has not covered in its coverage of COP26 Glasgow. Yi says China is making changes to its entire system not only its energy sector, across the whole society and the economy. Yet he says "nobody knows this." The working guidance document for carbon control China has put out says it will peak coal consumption by 2025.  Yi says it is unfair to ask China to close all coal powered plants, saying that if these plants with a life of 10 years were closed now who will pay for stranded assets and who will hire the laid off workers. He called attention to western nations failure to provide climate finance to China, India and developing countries. And he called attention to the the plans that by 2030 Chinese investment is to have 1200 gigawatts of installed solar and wind energy, more than the entire installed electricity capacity of the US. He says we are all in the same boat yet in different cabins, with some living in bigger space and consuming too much. ...

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The University of Michigan Transportation Research Institute said the average fuel economy of all new passenger vehicles purchased in January 2012 was 23 miles per gallon, up 0.8 or 4% from December 2011. This includes cars, light trucks, minivans, and SUV's. Professors Sivak and Schoettle of the Institute also released a U.S. Eco-Driving Index, or EDI, which estimates average monthly emissions of individual U.S. drivers for Nov. 2011 at 0.86- this is down 14% from October 2007. The need to reduce reliance on imported oil for the U.S., Europe, China and India, the high price of oil, and the need to reduce automobile emissions to improve air quality, make improvements in average fuel economy and emissions per driver absolutely critical.

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Tourists from China went up by 20% in 2015, going over 1 million. Foreign enrollment at Australian educational institutions was up significantly in 2015, going up to 645,000, up 25% over 2012 with the weaker Australian dollar. Australia's services sector including inbound education and tourism exceeded in value the minerals and metal ores exports in the last two months of 2015. This enabled the Australian economy to grow by 3% in the 4th quarter of 2015 over the prior year.

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This report in the WSJ makes the America centric thinking mistake of forgetting where China started from in assessing progress and China's new priorities. In 1960 the World Bank shows China per capita at $90 which does not change much till 1990 when it was $300, the Deng opening to western technology and capital pushed it up to $3000 the year 2000 (US $36,000) and $4500 in 2010 (US $50,000) when the global financial crisis hit. Since 2010 the Chinese economy was burdened by high local government debt and struggled to get to $10,000 in 2020 under Xi Jinping's first two terms as president. Yet it paid a huge price for this -the chance of Bo Xilai (2014) upsetting the twin banners of Science and Modernization of the May 4th 1919 movement that set the course of China for 100 years uninterrupted through the Nationalists, the Japanese occupation, the Maoist CCP, the Deng CCP opening and Jinping CCP pullback. The huge inequality was seen as an opportunity for Bo Xi Lai or some other leader to capitalize on moving China in an unknown direction that posed risks for the future of China. Even then the first preference of Xi would be to carry on with what had worked after Deng. Yet it was clear that working class votes were shifting the dynamics of elections after the Trump election and closing the doors to open access to western capital, technology, and investment. With Trump in erratic and uncertain ways, with Biden after the elections of 2020 consistent and with single minded determination to limit flows. Not just Xi, any other Chinese leader would have had to have the internal discussions about the need to shift back to a model China was familiar with and one that worked before- that of state intervention in the economy, that of reducing the inequalities that posed risks for the CCP's survival as forging a path for stability to carry out the twin banners of the May 4, 1919 Movement - Science and Modernization as China's salvation. Unlike the hysteria about China posing a challenge to the US these internal debates of Xi and the party may have concluded that the US with about half the population of China's as it grows with immigration in the future and multiple times the per capita GDP was a country that no other country was going to come close to. In this sense the supply chains are deceptive as these are likely to be completely redone under the Biden administration to bring most important manufacturing back to China. It is in this context that Xi had limited room to manoeuvre and decided to focus on stability for the long term to fulfill China's dream of the May 4, 1919 Movement of the last 100 years for Science and Modernization casting aside the risks associated for instability of the inequality that comes with more of the western type of growth, and with the climate change risks also associated with it. Lower growth gives China a chance to correct some of the flaws of the hyper growth that was partly of its own making and partly thrust upon it by investors from the outside, so that the new climate would best serve the goals of the May 4, 1919 Movement of keeping high the banners of Science and Modernization. This kind of rethinking is also going on in the US in the same manner about inequalities and hardships for workers and families, with some of the anger directed at China as internal political sentiment- hence the trillions of dollars moved by the Biden administration to address the flaws of growth under free markets and intervene in the economy where needed as in climate change to give firm sense of direction. In a sense the direction taken in different contexts the American and the Chinese are the same - address the problems of workers and families, of the people, as Lincoln had pointed out and striven so hard for, so that Labor is the more important than Capital, and workers and families vital to the nation.   ...

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In a policy unchanged since 1950's women in China retire at age 50 and men at age 60 years. China is aging faster than the US and it's population that is over 60 years is 20% of the population. Over the 5 years to 2025 about 40 million people will retire, about the size of the population of Canada. There will be 36 million fewer people in the working age population ages 16-59 to support them. Chinese migrant workers and families work longer hours than white collar workers making it difficult to raise the retirement age to European levels in a short time. The government's approach is to get public support by creating awareness about the problem and change the retirement age gradually over a longer period. The first step will be bringing the retirement age of women to the level of men. The 10 year gap in retirement age of men and women is not found in any advanced economy.

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With China's economy slowing, fewer jobs for college graduates in the cities, what is president Xi- who is visiting San Francisco this week- doing to tackle this problem? Even in Guangdong province with cities like Shenzen, it is very, very, very rural says Brian Spegele in this WSJ discussion. He talks about widespreard rural poverty. From his own experience spending time in the countryside in the impressionable years Xi has put this task to revitalize the rural areas to young people. In Guangdong alone about 300,000 youngsters will be given the opportunity to improve their credentials for future government work by going to the rural areas to bring talent that was drained from the 20 years of free market hypergrowth and urbanization. China is about 40% rural in 2023 and these regions have suffered badly, and Xi's efforts to revitalize come at a time after the pandemic when it makes little sense to continue urbanization as the only solution to problems. ...

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After all the media talk about tariffs inflation- inflation is at 2.4% in May 2025. Tariffs was part of the toolbox of strategies under Lighthizer and Jamieson on getting fair world trade, and not like Congressman Hawley in the 1920's who understood little about the workings of the US economy. This fact the official media such as the WSJ and NYT, Wash Post, BBC need to get it right about the Hawley Tariffs. Hawley was born in rural Oregon in 1864 went to country schools, and was president of Willamette University in Salem, when it's population was 4258. As House Ways and Means Committee chairman he wrote the failed tariffs bill Hoover signed in 1930. DJT's US Trade Representative Lighthizer in 2016 led the successful negotiations with Japan under Reagan, Scott Bessent who leads negotiations on tariffs with China with USTR Jamieson, has a deep understanding and grasp of today's financial markets. Tariffs is one of the tools in the US toolbox to get Japan, China, South Korea to even the playing field for US companies and bring back manufacturing to the US. Without it China would not budge from its unfair advantage and would not negotiate in fairness. This is proven in the way Japan in the 1980s and China today are responding to the US position preparing their economies for not relying on sudden surges in exports putting whole industries and workers in America and Europe out of work and out of jobs. DJT says- "No we are not going to accept that," the EU is catching on and adopting a similar position, China knows that.  The media is irresponsible in presenting tariffs in a negative way, irresponsible to American workers the 10 million put out of work since 2000, and to American families and the Nation.   ...

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Some local governments in China are making vaccination mandatory. China is setting a goal of getting 64%  of the population fully vaccinated by the end of 2021. In European Union countries mandatory vaccination by country or region is now being put in place to fight new coronavirus variants that spread faster in the population. The reopening of economy, business and tourism is increasing the risk from variants in summer 2021. The mandatory vaccination is a way to increase the percentage of the population that is vaccinated. Getting younger people who lag behind to get vaccinated is important to protect the percentage of the elderly population that is still not vaccinated. There are risks also to the younger population as seen in previous waves of the pandemic. The initial hesitation to make health pass showing a person is vaccinated mandatory was because only a small fraction of the population was vaccinated in Europe. Now that over 50% are vaccinated in most EU countries and UK, that hesitation thinking that it is discriminatory to those people who did not have access to vaccines no longer exists. Ample vaccine supplies and the misinformation spread about vaccines are making action on health pass necessary to protect the overall population. National governments in France, Denmark, Austria, Greece, and local governments in Germany, Portugal and other EU countries such as Ireland, Italy, see the danger from coronavirus variants that spread quickly as too big to take any risks a second time. ...

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If the trade war escalates to the point at which president Trump imposes tariffs on all Chinese goods imported into the U.S. on Jan. 1, 2019, China could retaliate with its own tariffs and this might affect Boeing aircraft as well. The results would be to tip the economies of both countries into a recession, and affect Mr. Trump's best chances for reelection in 2020. This can happen as Mr. Trump has a great deal of confidence in his negotiating style. The negotiations so far have shown China misread the U.S. and Mr. Trump leading to a strong U.S. response.  There is also the importance of not losing face, Mr. Xi's domestic audience, Chinese industry that sees a fundamental change from state subsidies model as eroding its position and offering resistance, patriotic sentiment making it harder to meet U.S. demands. Fundamentally for Mr. Trump it is about U.S. trade deficit and changing the huge trade surplus of almost $1 trillion that China enjoys each year with the U.S. which has been and is no longer sustainable. Mr. Trump also has the backing of Republicans on this issue and Democrats cannot afford to be soft on this issue as it involves American workers and jobs are at stake. Both sides could be in for a protracted negotiation as Mr. Trump feels it is right for Americans to expect fair trade and technology transfer that respects American concerns. In addition the U.S. could sense that it exports less to China, is less dependent on exports than China, and as the party that is hurt by unfair practices insist on its position. After Japan agreed to U.S. demands that it reverse a huge trade surplus in the seventies in which Mr. Lighthizer was the negotiator its growth declined sharply and is economy stagnated. China may sense inside that this could happen to its economy. Today Lighthizer the U.S. negotiator and Trade Representative could also push hard because of he was able to convince Japan to change its course. ...

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The U.S. Federal Reserve Open Market Commitee takes a position of pause and wait as it decides in March 2012 not to take any new further bond buying stimulus measures. There is uncertainty in equity markets about the effect this will have on equity prices. During the last two pauses in 2010 and 2011 the equity markets experienced downturns after withdrawal of bond buying measures by the Fed, leading to Fed action with QE 1 and QE 2 followed by a surge in equity prices and the S&P at over 1400. At the peak during the 2001 and 2008 dot-com and housing propelled booms the S&P reached over 1500. At this rate the curve for U.S. equity prices for the 2008-2012 period resembles a repeat of a narrow steep V shaped curve with only a 7% climb in April 2012 needed to reach the 1500 point in the S&P 500 average at which the previous two booms in prices ended up in a bust. John Taylor, Stanford economist, in a separate op-ed in the Wall Street Journal on March 29, 2012, called for a change in the mandate of the U.S. Federal Reserve for a more rule based policy because of the dangers of repeated boom and bust periods in the U.S. economy as a result of ultra loose monetary policies. The problem at this point in April 2012 is that profits of companies are not expected by analysts to come in strongly in the second quarter, with a slightly improving unemployment picture, expected upward pressures on oil prices from the Iranian situation, eurozone debt problems in Spain and Italy, and slowing growth in China, India and Brazil. These fundamentals do not support an S&P at the levels seen during the height of the last two booms of 2000-2001 and 2007-2008....

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Orlik cites a 2011 survey from China's South Western University of Finance and Economics, which surveyed 8000 households and found that 55% of Chinese households had little or no savings for that year. 10% of households control 86% of wealth and 56% of household income. Surveys in 1995 and 2002 showed 10% of households controlled 31% and 41% of wealth. In the U.S. top 10% of households control 74% of the wealth, according to the Federal Reserve figures. What this means, says Orlik, is that before China can shift to consumption based growth the low incomes of the majority of households have to go up, requiring a major policy shift. Under current policies and even with movement in the direction of the DRC/World Bank policy report for China for a gradual shift away from state owned enterprises, there is little prospect for rebalancing the world economy.

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Greg Ip of the WSJ looks at the result of changes in supply chains away from China, and the new trading relationship with China to 2028. He says the shift to a new global supply chain that diversifies it away from concentration in China is taking place. Would taking the tariffs from 30% to 60% under a new Trump administration be a good idea? Greg Ip thinks it is a bad idea as the change is gradual and is actually taking place. It may have the unintended effect of worsening US China relations essential for global stability when it is coupled with erratic or retaliatory rhetoric. Rhetoric that appears to China that it is being singled out in world trade beyond what are changes that have taken place with Japan in the past in trade. The Biden administration is for good reasons working to restore a balanced yet stable relationship with China. Apple is shifting production of 25% of iPhones to India. Samsung is investing more in Vietnam. The trade deficit with Mexico has reached $151 billion twice as large as in 2017. And $100 billion with Vietnam three times as large as 2017. The US trade deficit with China has dropped from $381 billion to $281 billion in the last 12 months, the Commerce Department reports show. And from $1.1 trillion with the whole world from $1.2 trillion for the last 12 months, 4% of US GDP. Overall the Trump era tariffs of 30% have not reduced the US  trade deficit substantially but has shifted American and European foreign investment to India, Vietnam, Mexico and other countries as well as to the home country. Over time the supply chain would become truly diversified as India makes great strides to become the third largest economy with new infrastructure by 2030. The head emeritus of the European Union Chamber of Commerce in China, Joerg Wuttke, says the pressure to export will be high for China as its economy shifts more to manufacturing from construction. Most Chinese companies are producing more than internal demand in China, and most companies in solar are losing money, in wind turbines and solar all are losing money, Wuttke says. This means China will double down and increase its investments in Mexico, Vietnam, Morocco and other countries so that it can send its products to the US through third countries that do the final export. One expert even says removing a few screws here and some there, find a different supplier, and shipping to a third party for final export that makes it not 100% Chinese content, the pressure for that is high. ...