Pushing back a bully is not starting a war

Tuesday, December 20, 2016
 | 
Chris Woodward (OneNewsNow.com)

China (PRC)Some observers are concerned that President-elect Donald Trump will ignite a trade war with China but one longtime analyst says that war is well underway. 

"Tackling China's cheating won't start a trade war," predicts trade analyst Steven Capozzola, who described China's record of cheating and currency manipulation in a commentary for website Polizette.

On the issue of Trump starting a trade war with China, Capozzola writes that the United States has been "fending off" a trade war since the 1990s.

The trade analyst explains that China "pegged" its currency, the yuan, to the U.S. dollar in 1994. By doing so, he says, the yuan is undervalued and therefore products are sold to the U.S. at a low cost.

Trump Economic Club DetroitIt also ensures U.S. goods are "extra expensive" when entering the Chinese market.

China and its manipulated currency are currently making headlines, since Chinese citizens were buying up dollars during 2016 due to the struggling yuan.

Chinese banks, meanwhile, are offering customers drawings and prizes to convert their dollars back to the the yuan.  

The communist country also pours billions of dollars into key industries, too, subsidizing the manufacture of products such as glass, rubber, paper, and steel.

The trade analyst explains in his commentary that China is being sued by U.S. Steel Corporation for "steel-dumping," exporting cheap steel to the U.S. market after stealing the corporation's high-tech research on producing lighter, stronger steel.

Capozzola's commentary also shows the ballooning trade deficit with China, which was approximately $30 billion in 1994. It had climbed to $103 billion by 2002 and hit $367 billion in 2015.

Chinese soldiers marchingLed by Trump, Capozzola says, America can use its leverage to hold China accountable for its unsavory practices, which would help U.S. manufacturers. 

"Interestingly we're told that China owns our debt," he says, "but in fact they own only about six percent of federal U.S. debt, and if anything they've accumulated U.S. assets so as to deliberately raise the value of the dollar."

What that means, he explains, is that China doesn't want a trade war because that could lead to a depreciation of the value of the dollar.

"It would actually hamper the very strategy that has helped them sell so cheaply into the U.S. market," he predicts.

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