by Peter Franklin
Monday, 19
July 2021

The map that should terrify the West

China has replaced the US as the main trading partner of most countries
by Peter Franklin
Marking the 90th Anniversary Of The Communist Party Of China. Getty

What is the biggest threat to the West right now — China or inflation? Stupid question, you might think. One is a country, the other an economic indicator. They belong to different categories, so comparing them is ridiculous.

Except there’s a very deep connection between the two. Right up until Covid, we’ve enjoyed a twenty years of miraculously low inflation. Over the last decade, we’ve really pushed our luck — forcing interest rates down to zero and instructing our central banks to turn on the printing presses (or QE as it’s politely known).

In any other era this would have meant runaway inflation. But not in the pre-Covid 21st century. In fact, some countries have struggled to avoid deflation — i.e. falling prices. So how did we defy the laws of economics for so long?

A huge part of the answer is China. By opening ourselves up to cheap Chinese exports we kept inflation at bay. But that doesn’t mean there hasn’t been a price to pay. There has and there is — and it can be seen in the following chart from the The Economist:

In just twenty years China has displaced the US as the number one trading partner of most countries across the world. That includes virtually all of Asia, Africa and Australasia; and also most of South America and the majority of European nations (though not yet the UK, France and Italy). 

Worried? We should be — but expect endless excuses. For instance, some people complain this a comparison of China with America alone. For instance, the map would look different if the European Union were included. To which the obvious response is: how many divisions have they got?

Another cope is that China’s trade position is built upon low value items that the West imports to make high value items. But if that were the whole story, then why is the West struggling to build 5G networks or nuclear power stations without high level Chinese involvement? China isn’t just the Saudi Arabia of widgets, it is an economic, technological and military superpower. 

Rather than face up to the strategic implications, the West right now is more worried about the internal threat of inflation. Thus the news that the export side of China’s economy is roaring back into life will have been met with pathetic relief not foreboding. 

Clearly, governments need to ensure that post-Covid inflation is no more than a transitory phenomenon. However, the fact remains that Covid has left China stronger and the West weaker — and that our leaders have no idea what to do about it. 

Join the discussion

  • It may well terrify the few members of the public who keep their eyes open, but how many is that? Will it “terrify” the governments of the west? With their eyes fixed on keeping up with the latest round of nonsense from the “woke”, I suspect not. Only if the west manages to dislodge the new establishment does it stand a chance of survival – let alone of competing with modern China. And the probability that it will dislodge these people is remote.

  • Sadly so many people do not recognize China’s aspirations to be the only superpower. I think I read the aim was about 2050. They are well on track and the champagne socialists, the hard left, the slumbering, the progressives, the baying lefties and the like will not know what has hit them.

  • Inflation is a tax. Basically more dollars are printed, but amount of goods and services remain constant, prices rise as more money chases the same goods. (That Tech is deflationary is another story) And now the Government has debt.

    If inflation is 2% it means the $ is devalued by 2% per year. You just paid the government 2% of your purchasing power to cover the excess (M2, the money supply) production of money they used as Redistribution. (They printed money, gave it to whom they wish, then tax it back from you and everyone as inflation) Government Redistribution of $ is what deficit spending is, and it is paid back by the tax called inflation.

    Do you approve of how the Gov spends its money? Because everyone pays. Inflation is really redistribution from the middle and poor as inflation, to the super wealthy as they end up with what the gov printed in the end. The wealthy own ‘Appreciating Assets’ (professionally managed stocks and hedge funds and such) which grow faster than inflation, and so make them money, and so do not pay the inflation tax – cool, isn’t it?

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