Amid escalating trade war, China cuts US investment by 92%

US president Donald Trump’s ‘beautiful’ trade war with China is going great, if market drops, loss of investment, volatility, and price hikes are how one measures ‘winning’.

After all, Trump said that trade wars are ‘easy to win’ and sometimes necessary.

Now he’s got one, but the figures are returning the sort of results that one would typically associate with ‘winning’ or ‘success’.

Trump has initiated a trade war with China which continues to escalate, and which has not only resulted in retaliatory tariffs coming from China which mirror the dollar amount of trade impacted by Trump’s tariffs, but has also resulted in a drop in investment in the US from China to the tune of 92%.

RT reports:

The US market saw a significant plunge in investment from China in the first five months of the year amid a growing trade row between the world’s two largest economies.
Chinese investments totaled $1.8 billion from January through May, representing a 92-percent drop against the same period a year ago. That’s the lowest level in seven years, according to the latest report by Rhodium Group, a research provider that tracks Chinese foreign investment.

Chinese corporations that had been pumping cash into the US to cement ties over a long period have cut their investments in recent years. In 2017, investments declined by 36 percent to $29.7 billion from $46.5 billion during the previous year.

“The more confrontational approach of the Trump administration toward economic relations with China has cast some doubt, in these companies’ minds, about their position here,” said Thilo Hanemann, a director at Rhodium Group, as quoted by CNN Money.

The plunge was reportedly triggered by an ongoing trade conflict between Washington and Beijing, in which the US administration has taken an aggressive stance towards Chinese trade policies. Last week, the White House introduced 25-percent tariffs targeting $50 billion of Chinese imports to the country. US President Donald Trump threatened to hit another $200-billion of Chinese goods with an extra 10-percent tariff after Beijing retaliated.

Trump has persistently slammed Chinese trade practices, calling them unfair. The US president has also accused Chinese companies of stealing American technology and intellectual property. As a part of restrictive measures in March, the US imposed tariffs on imports of steel and aluminum from China along with other countries including India and Russia. Earlier this month, that measure was extended to some of the US’ traditional allies – the EU, Canada and Mexico.

Somehow, these tariffs are supposed to bring back business which outsourced to China in pursuit of cheaper labour and relaxed environmental regulations to allow for realization of greater profits, equalize the trade deficit situation, and end China’s acquisition of intellectual property allegedly acquired as a condition for market access.

Trump wants to make America a successful competitor in the manufacturing realm in order to entice these companies to repatriate, but the only way to really accomplish that goal is to make the US a cheaper business environment than China, which can only realistically be achieved by ditching wage and environmental regulations which are a part of what makes America a more livable place than China.

However, once the tariffs response has sufficiently saturated world markets, those manufacturing jobs won’t be providing the same value to workers that it once provided their forefathers, due to depressed wages with less purchasing power, as the cost of living increases with the increases in the cost of goods factoring in the expense of global tariffs.

Additionally, the war that Trump is waging against free trade threatens to undermine the Breton Woods order, which, in turn, threatens the purchasing power of the dollar. Once that happens, America will be more isolated, and will possess much less international influence, and will never again be able to see itself as number one. Rather than enact just wage policies, this is the policy that Trump is pushing in his quest to revive America’s domestic prosperity.

Is this what ‘winning’ looks like to Trump? Is this really what it would take to ‘make America great again’?