General

US lawmakers have proposed a bill calling for a showdown with China and ending trade between China and the United States to reduce dependence on China! According to the report released by the Russian media Sputnik News Agency on March 21, the China related bill submitted by the US Republican Senator Josh Holly has attracted media attention. In this proposal, Holly called on the Biden administration to permanently terminate its "normal trade relations" with China, re-examine all tariffs on China, and raise them. Holly's explanation for this proposal is to minimize the United States' dependence on the Chinese economy, bring job opportunities back to the United States, benefit American workers, and prevent the continued growth of the US trade deficit with China.

Although it is not yet certain whether this "clever plan" will ultimately succeed in Congress, in the current explosive anti China political atmosphere in the United States, this proposal reflects the voices of many extreme hardliners against China. From a practical perspective, Holly's proposal not only lacks the possibility of success, but also lacks basic operability. There are two reasons for this: firstly, as a seller, the United States has been continuously tightening its exports to China in recent years. Originally, as a technology power, the United States had the greatest profit margin by adding high value technology products, while China is the largest single export market for the United States.

However, guided by the misconception of "anti China terrorism", the proportion of technology products in US exports to China is declining year after year, while the proportion of agricultural products and energy is constantly increasing. Although these bulk commodities are basic commodities, due to their high substitutability, the US is facing enormous international competitive pressure. Moreover, as the number of high-tech products that China can purchase in the United States decreases, the impact of terminating Sino US trade on China is gradually decreasing.

Secondly, as a buyer's market, the United States needs to continuously import cheap goods from China to hedge against inflation. This is evident from the record high total trade volume between China and the United States in 2022. Despite the high tariffs imposed by the Trump administration and the so-called "rise of the Southeast Asian industrial chain", the preferred purchasing place for American importers is still China. This strongly proves that even in the face of unfair non free market competition, "Made in China" still has strong resilience and competitiveness, which can not be easily explained by the "demographic dividend". Considering the above two reasons, it can be said that the United States is even more inseparable from China. Not only that, but almost every American politician has shouted slogans such as "bringing job opportunities back to the United States".

But the reality is that the low-end manufacturing industry, which does not require too much technological content and can generate a large number of jobs with just capital injection, has gone through two administrations in the United States, from Trump to Biden, and cannot do so. Even the proud TSMC factory in the United States, which the Biden administration is proud of, was achieved on the basis of plunder, which itself illustrates many problems. On the one hand, it is necessary to face a decline in revenue, and on the other hand, it is necessary to bear the rise in import prices, delayed delivery, and even quality decline. The "hard decoupling" in the minds of extreme anti China forces in the United States has been repeatedly proven to be a dead end that cannot be taken at all.

But for China, the risks and threats brought by the hard decoupling of Sino US trade are objective and not transferable by our will. Therefore, how to play the "second half" well is the key to this game. It can be clearly stated that the trade deficit between China and the United States will not disappear in the short term, and may even gradually expand due to the risks of economic downturn and financial turmoil currently facing the United States. However, the more sluggish the economic operation of the United States is, the more arrogant the neoconservatism forces of the United States will become, because they must blame China.

Fortunately, China's US debt is continuously decreasing, and the process of RMB internationalization is also accelerating. The US's attempt to use the "three board axe" to topple the Chinese economy has been resolved by our "close combat". However, whether this "smart" anti China proposal is ultimately passed or not, it cannot stop the inevitable trend of the US economy continuing to decline.